Gunster attorney Seth Kaplan was quoted in a New York Times article today about a U.S. Treasury Department move that would eliminate an up-to-40-percent valuation discount for shares in family limited partnerships.
According to the Times, the proposed section 2704 tax code change will eliminate the ability of taxpayers to discount the value of minority shares given to family members. For example, writer Paul Sullivan illustrates, a $10 million gift of shares may be listed as just $6.5 million for tax purposes.
The discount aimed to offset a lack of marketability, the article says, where likely potential buyers of a family member’s shares may consist of only other family members.
Kaplan, a trusts/estate planning and tax attorney working out of Gunster’s Boca Raton office, told the Times that even if the valuation discount goes away, there are a multitude of ways to protect the interests of a family estate when it comes to tax planning.
Parterships or other entities can offer tax savings and other benefits, such as charitable planning and the protection of assets from creditors, Kaplan says.
There is urgency to act now, the Times article states, because the hearing on the “proposed final regulations” to the Internal Revenue Code is scheduled for Dec. 1 and, if unchanged, the earliest it might go into effect is Dec. 31.
Thus, families who wish to take advantage of the discount may be unable to do so if they wait until next year.
- Treasury wants to end tax deal for some family-owned businesses (The New York Times, 8/19/16)
- Proposed tax regulations affecting valuation discounts topic of Dec. 1 public hearing (Gunster.com alerts, 8/10/16)