Potential Limitations on Gift Tax Strategies Coming Soon
Tuesday, August 25, 2015

Valuation discounts have been a significant component of estate planning for many years.  By contributing assets to a family entity and gifting or selling an interest in the entity to family members, you can effectively remove high-value assets from your estate at lower valuations and shield them from the federal gift and estate taxes.  There must be valid business reasons to set up family entities, but valuation discounts can be an important factor in using family entities in your estate plan.

The IRS has challenged (on properly created and operated family entities), with limited success, this powerful tax planning tool for years.  The IRS has recently indicated that it will propose regulations to impose substantial restrictions on the use of valuation discounts within family entities.

It is possible that substantial restrictions limiting the use of valuation discounts within family entities may be in place, in the form of proposed regulations, as early as this Fall.

 

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