IRS and Treasury Proposes New Regulations for Estate Planning Technique
August 8th, 2016 by admin
The Treasury Department and the IRS have proposed changes to regulations that would make it harder for business owners to use a common estate planning technique.
The proposed regulations address the use of valuation discounts of ownership stakes in privately owned businesses or land. The discounts have been permitted because they are harder to sell or represent a minority interest. As they are used now, the reduced value of these assets allows families to incorporate them within the $10.9 million lifetime exclusion from estate and gift taxes for married couples.
Mark Mazur, the Treasury Department’s assistant secretary for tax policy, stated that ‘‘It is common for wealthy taxpayers and their advisors to use certain aggressive tax planning tactics to artificially lower the taxable value of their transferred assets. . . Treasury’s action will significantly reduce the ability of these taxpayers and their estates to use such techniques solely for the purpose of lowering their estate and gift taxes.’’
It should be noted that the regulations must go through a 90-day public comment period, and parts of the regulations will not go into effect until 30 days after a final version is issued.
If discounted ownership stakes of a business or land ownership are part of your estate plan, please call our office to discuss whether or not any changes to your estate plan should be made.
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