family partnership ignored for valuation purposes
Article Abstract:
The IRS held that a decedent's estate could not realize a valuation discount for assets transferred to a family partnership only weeks before death. The IRS valued the transferred interests without consideration to the family's partnership agreement and suggested that the valuation discount can be characterized as a taxable gift. It made use of Section 2033 stating that a decedent's gross estate is characterized by the value of all property and the nature of the decedent's interest in it at the time of death. In addition, the IRS held that there as no business reasons for the transfers and should be treated as a single testamentary transaction that occurred at death. The move to transfer the decedent's assets was made to avoid estate taxes and that any valuation discount should be ignored.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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Dividing a family business may prevent estate tax deferral
Article Abstract:
Section 6166 will allow the estate of a family business owner to defer the payment of the estate tax on the business for as long as 14 year if all conditions are satisfied. This tax deferral benefit, however, may be lost depending on how the ownership of the business is structured. Highly complicated ownership structures recommended by advisers for various business purposes, such as liability separation or the creation of pass-through entities, could hurt the estate's chances of qualifying for estate tax deferral. For instance, the benefits of Section 6166 may be lost totally or partially if the business is structured as one corporation consisting of multiple entities that may include subsidiaries, tiered partnerships or brother-sister controlled groups.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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