The Treasury Department’s issuance of proposed regulations under Code Section 2704 were met with significant criticism and confusion. The §2704 proposed regulations were intended to provide the IRS with an additional sword to reduce and in some cases eliminate valuation discounts on family-controlled business entities. After thousands of comments were…
The IRS is focused on reducing valuation discounts associated with transfers of interests in family-controlled businesses, but this focus will result in family members being deemed to receive a different value than non-family members. This also means that an appraiser will be required to establish two different values based on…
As mentioned in several recent posts, the proposed regulations under Code Section 2704 are aimed at reducing valuation discounts associated with transfers of interests in family-controlled businesses. So that the proposed regulations capture certain entities that may be disregarded for federal income tax purposes, such as single-member limited liability companies,…
The recently issued proposed regulations under Code Section 2704 are specifically targeted at substantially reducing valuation discounts associated with family-controlled businesses. The clear losers are the families that have taxable estates. These families will likely pay additional estate and gift tax once the §2704 regulations are finalized. In order to…
The simple answer is that the IRS believes that valuation discounts taken on family-controlled entities are falsely high, which results in lower transfer tax revenue to the Treasury. With the foregoing in mind, it is important to understand how the IRS, courts, and taxpayers value a business interest under current…