Of FLPs and family LLCs and cabbages and kings
Article Abstract:
The tax benefits of family limited partnerships and family limited liability companies have been promoted widely, but this promotion has attracted IRS scrutiny of transfers to these vehicles and valuation discounts on interests in them. These entities are touted as an asset protection device that can help taxpayers both retain control and transfer assets at reduced tax rates. The IRS is actively contesting valuation discounts, and, when these entities are formed by taxpayers with credit problems or liability risks, tax evasion or fraudulent transfer charges may result.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1997
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Succession planning for the family business enterprise: sales, GRATs and donative transfers - the comparative advantages
Article Abstract:
Installment sale methods of making intergenerational transfers of assets are more reliable estate planning techniques than are grantor trust-related methods and gifts. Grantor retained annuity trusts and trusts designed to be intentionally defective pose mortality risks and the possibility of IRS disapproval. The tax savings of paying capital gains on sale transfers can be significant for large estates that would otherwise be paying estate tax rates of 55-60%. Installment sale, self-canceling installment note and sale for private annuity methods are detailed.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1996
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MIGRATs are better than your GRATs despite the new section 7520 regulations
Article Abstract:
Minority Interest Grantor Retained Annuity Trusts (MIGRATs) offer the ability to use valuation discounts as well as present value discounting, making them an ideal estate planning tool for many. Regulations concerning section 7520 interest rates, used to determine rates of return over which a trust zeros out and begins to accumulate and transfer assets with no gift tax consequences, make it wise to structure GRATs in a way that assures zeroing out. This is easily done by using minority interests when structuring the GRAT.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1996
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