IRS Proposes Regulations to Limit Strategy to Avoid Estate Tax

By Jason Palmisano

The IRS has issued a notice of proposed regulations to limit the valuation discounts individuals have been afforded when they engage in certain types of intra-family transfers involving their family owned corporation or family partnership.  Under the proposed regulations, the valuation discount — sometimes up to 40% — that is given for the transfer of assets that have limited liquidation rights would not apply for “deathbed” transactions, only to transfers that occur more than three years before the transferor’s death.  While the proposed regulations are very specific, the restriction on the valuation approach could apply to the inheritance of most family businesses.  You can read more about the proposed rules the IRS wants to implement in the Wall Street Journal.


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