New estate freeze rules: practical issues for gift leveraging

Article Abstract:

Sections 2701 to 2704 of the Revenue Reconciliation Act of 1990 (RRA '90) allow the use of preferred partnerships in estate planning to effect gift leveraging, bringing tax savings. RRA '90 has only four restrictions on capital structure: the 'zero value' rule, the 'no gimmicks' rule, the 'minimum residual value' rule and the 'compounding' rule. Economic, legal and valuation issues of gift leveraging are taken up. Should a change in business conditions warrrant reversal of the preferred capital structure, exit strategies are also discussed. Consultation with valuation specialists and business planners is necessary to ensure an advantageous gift tax assessment.

Methods, Laws, regulations and rules, Estate planning, Estate freezing

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Property Contributions to Partnerships More Likely to Result in Gain After TRA '97

Article Abstract:

Since the passage of the Taxpayer Relief Act of 1997, property contributions such as of stocks, securities and other assets made by partners, may no longer be tax-free as before.

Partnerships, Taxation, Partnership

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