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Done with Discounts? New IRS Proposals Aim to Eliminate Valuation Discounts for Closely-Held Businesses

On August 2, 2016, the IRS released proposed regulations that, if finalized as proposed, would all but eliminate most currently available valuation discounts for interests in family controlled entities, including operating businesses. These proposed regulations, relating to Section 2704 of the Internal Revenue Code, attack discounts for lack of control and/or marketability in connection with transfers of interests in family controlled entities, thereby limiting tax planning opportunities and increasing potential estate tax liability.

A public hearing concerning the proposals has been scheduled for December 1, 2016. Given the possibility that these proposed regulations may become effective within the next several months, clients who own interests in family controlled entities should think about making transfers as soon as possible to take advantage of the discounts before the IRS finalizes the proposed regulations and the discounts disappear.

© 2020 Jones Walker LLPNational Law Review, Volume VI, Number 263


About this Author

Jones Walker's Estate Planning & Administration practice provides a variety of estate planning and personal planning services for individuals and families, including wills, lifetime trusts, and marital property agreements. Our attorneys administer decedents' estates, both domiciliary and ancillary, and prepare estate and gift tax returns.

Our attorneys, several of whom are members of the American College of Trust and Estate Counsel, are experienced in structuring estate plans for estates of all sizes, including estates of business owners, as...