On August 2, 2016, The IRS released proposed regulations under Internal Revenue Code
Chapter 14 that would eliminate the application of discounts for minority interest and marketability for transfers between family members in closely held entities for gift, estate, and generation skipping transfer tax purposes ( IRC Sections 2701-2704).
The elimination of these valuation discounts will have a significant impact on succession and estate planning for all families with ownership interests in family controlled business and partnership entities.
The proposed IRS regulations will not apply to transfers made prior to the regulations being finalized which is anticipated to occur in December 2016. As these regulations are complex, it is recommended that any family group involved in succession or estate planning with a closely held business or partnership entity take immediate action to avoid the loss of valuation discounts allowed under current federal tax law.
Should you need business valuation assistance or have questions, please call one of our credentialed professionals at (615) 822-8342 or contact us via email.