Proposed Changes In Estate and Gift Tax10/14/2016
The IRS has issued proposed regulations designed to prevent taxpayers from lowering the estate and gift tax value of transferred interests. The regulations prevent the long-time allowed method of discounting the value of property for transfers of minority interests due to lack of control and marketability, regardless of whether the entity owns an operating business or merely publicly traded securities. These discounts were commonly used to transfer wealth to younger generations at a reduced value for estate and gift tax purposes, while maintaining the full economic value of the assets for the next generation. The regulations are temporary and hearings are scheduled for December 1, 2016. The regulations state that the final regulations will not become effective until at least thirty (30) days after the IRS issues final regulations. Thus, discount planning may continue at least until early 2017. If you have considered making gifts to younger family members in order to avoid or minimize estate and/or gift taxes, it appears that now is the time to implement the strategy. Please contact Michael S. Pinsky at (312) 377-7884 or Lauren E. DeJong at (312) 377-7855, if you have any questions or wish to proceed with this planning.