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August 25, 2016

Stroock Estate Planning Alert

By: Anita S. Rosenbloom

For several years, the elimination of valuation discounts for transfers of minority interests in family-controlled entities has been the target of the Obama administration’s legislative proposals, and the IRS has repeatedly warned practitioners that they intended to issue regulations that would sharply curtail such valuation discounts.  The day of reckoning has arrived, as earlier this month the Treasury Department released the long-feared regulations eviscerating valuation discounts.  If the proposed regulations are finalized, they will have a dramatic impact on the valuation of closely held business interests – both active and passive.

This Stroock Estate Planning Alert provides an overview of the proposed regulations, which fortunately do not become effective until they are finalized, and in some cases not until 30 days after they are finalized.  There is a last chance opportunity to make discounted transfers until year-end, and possibly beyond, when the window may slam shut on most valuation discounts for family controlled entities, dramatically increasing future gift, estate and generation-skipping transfer taxes for their owners. 

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