Legal Alert: Plan Ahead for Gift and Estate Transfers of Family-Controlled Entities

Margaret G. Kubicki

The IRS recently proposed new Regulations that, if finalized as written, will eliminate or severely affect, the ability to utilize valuation discounts on the transfer of an interest in a family-controlled entity, regardless of whether such entity operates an active or passive business.  Valuations of a transferred family business interest typically take into consideration discounts for lack of control and lack of marketability.  These discounts allow donors to transfer interests in family-controlled businesses at a reduced price, thereby allowing the transfer of a greater amount of wealth.  Although business owners may continue to gift minority ownership interests, the potential loss of these valuation discounts will reduce the amount that one can transfer free of gift, estate and generation skipping transfer taxes.  The Proposed Regulations may not be adopted as written; however, now is the time to consider planning opportunities. Please contact us if you would like to discuss any tax planning opportunities for your family-controlled business.

James H. Brun
(513) 579-6585

Alan S. Fershtman
(513) 579-6961

Bill Keating, Jr.
(513) 579-6435

Margaret G. Kubicki
Of Counsel
(513) 579-6913

Claire V. Parrish
(513) 579-6936

Joseph P. Rouse
(513) 579-6417

Mark E. Sims
(513) 579-6966

KMK Legal Alerts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.

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