Alert - New IRS Proposed Regulations to Potentially Eliminate Valuation Discounts
The IRS has proposed long anticipated new tax regulations that appear to eliminate most valuation discounts on transfers of family-owned entities to family members. Since valuation discounts substantially affect transfer taxes on business interests being transferred between family members, the proposed regulations, if approved, would have a substantial impact on transfers of interests in family-controlled entities. VALUATION DISCOUNTS Valuation Discounts are commonly used in connection with the valuation of interests in closely held companies. Currently, the most common valuation discounts are for lack of control (minority interest discount) and lack of marketability. These discounts are used to lower the value of an interest in the company that is to be gifted and/or sold to children...