You never know what is on the horizon but you can be prepared


Nearly one year later than expected, the Treasury has finally issued proposed Regulations under Internal Revenue Code Section 2704 that if adopted in their present form would appear to eliminate almost all minority (lack of control) discounts for closely held entity interests, including active businesses owned by a family.

A 90 day comment period begins immediately and a hearing has been scheduled for December 1, 2016 to consider those comments and either adopt or modify these proposed Regulations before they become final. The new Regulations, if adopted, will not become effective for at least 30 days after they become final. This means that these new Regulations will not become effective until sometime after the first of next year (2017).

Because of their potential impact on estate freezing strategies and intra-family discounting, if any of you are working on (or subsequently develop) cases involving a sale of and entity holding of business interests to an IDGT or other situations that contemplate the direct or indirect transfer of intra-family transfers of business interests where the use of discounting is an important part of the overall planning process, you will want to make clients aware that they may want to consider taking action before year-end.

Please contact any one of the members of the Smith Companies’ Advanced Planning Group with questions or if you need further information.