Michael B. Lehner, CPA/ABV, CFE, ASA
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Recent developments that affect gift and estate tax valuations

gift and estate tax valuations

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In August 2016, the IRS proposed changes to the tax code intended to curb abusive estate planning practices involving family limited partnerships (FLPs) and other family-controlled entities. Specifically, the proposal called for changes to the treatment of certain lapsing rights and restrictions on liquidations in determining the value of transferred interests in family-controlled entities under IRC Section 2704.

Business owners, valuation professionals and the American Institute of Certified Public Accountants (AICPA) criticized the proposal for being too broad and general. They were concerned that the proposal appeared to 1) extend to operating businesses, and 2) eliminate valuation discounts for lack of control or marketability for family-controlled entities.  In October 2017, the U.S. Treasury Department and IRS officially withdrew this proposal in its entirety.

So, FLPs remain a viable estate planning tool for the time being. But, as of this writing, Congress is also considering a tax reform framework that would eliminate estate and generation-skipping transfer taxes altogether.

Check with your business valuation advisor for the latest information. This framework is preliminary and basic. It’s possible that more detailed tax reform legislation may be enacted by the time you’re reading this.


Michael Lehner

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. In addition, any discounts are used for illustrative purposes and do not purport to be specific recommendations.