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A Better Partnership


Aug 2016
August 04, 2016

Proposed IRS Valuation Regulations Create Narrow Window to Transfer Business Interests on Favorable Basis

This week the IRS released new proposed regulations that would dramatically increase the value for estate and gift tax purposes of family-owned and controlled entities, including corporations, partnerships and limited liability companies. If finalized, these rules will apply to operating and investment companies. Among other things, these proposed rules eliminate discounts for lack of control, require attribution of ownership among family members and levy an estate tax on certain interests transferred within three years of death.  

A hearing on the proposed rules is scheduled for December 1, and the regulations could be finalized at any time thereafter. Transactions completed before the rules are finalized, or in certain cases within 30 days of the issuance of final regulations, will be governed by the existing, more favorable valuation rules. Clients therefore have a narrow window in which to complete transfers of interests in their family-owned enterprises. Clients should not delay acting; planning for transfers of interests requires careful consideration of a variety of tax and non-tax issues.

For further information on the proposed regulations, contact Mark K. Harder at 616.396.3225 or, or W. Michael Van Haren at 616.752.2125 or or your Warner Norcross & Judd estate planning attorney.

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