TAXATION OF TRANSFERS OF FAMILY BUSINESS INTERESTS

On Tuesday the Treasury proposed new tax Regulations which will dramatically increase the value of family business interests for gift and estate tax purposes and for family sales.

The Regulations propose eliminating discounts for lack of marketability and lack of control on intra-family transfers of interests in family controlled entities.

The Regulations will be effective when published in final form, which we expect to be early 2017.

To the extent that your plans include passing the family business to the next generation through gifts or sales, it may have significant financial benefit if you complete the transaction this year, before the Regulations become final.

We urge you to contact your professional advisors to determine how these changes will impact your family. If you have questions, we would be pleased to discuss them with you.

There is a sense of urgency in starting your actions sooner rather than later. In 2012 many families wanted to do transactions near the end of the year in the face of estate tax laws changing on January 1, 2013. We, and other professionals, were forced to turn away potential clients because we could not complete more projects in the remaining time. We are trying to make sure our clients and friends avoid that situation.