A group of lawyers from Akerman Law have posted their opinion on potential regulations to Section 2704 of the Internal Revenue Code that are brining about concerns for family businesses. The post explains,
Under the new regulations, taxpayers would be precluded from obtaining discounts for lack of marketability or control on transfers of interest in family businesses and family controlled entities for estate, gift, and generation skipping tax (GST) planning.
Beginning in 2015, we heard rumors that there was a likelihood that the Internal Revenue Service (IRS) would be issuing new Treasury Regulations to Section 2704 of the Code which would significantly curtail the use of such discounting. As 2015 became 2016, however, the rumblings of such an issuance simmered.
Why should you be concerned now?
At the recent Spring Symposium in May 2016 of the American Bar Association’s Real Property Probate and Trust Law Section, a Branch Chief in the Office of the Chief Counsel, IRS, stated that these Regulations were “…coming out very, very soon,” and would be the IRS’ “…first publication of spring.” We are well into spring, but the Regulations have not come out. The speculation as to when the Regulations will be released is currently on any-day-now status.
While there are no guarantees, there still may be a short window open to plan, provided you act now. If you have been thinking about transfers of interests in your family controlled entity to members of your family, it is recommended that you take action immediately if you want to take advantage of discounting under Section 2704, before the new Regulations are published and take effect.
Click for the entire opinion: Proposed Treasury Regulations Cause for Concern Among Family Controlled Businesses
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal