IRS regulations may significantly limit valuation discounts on interests in family entities. The Treasury Department is expected to announce new regulations on September 17, 2015.

If you own a business and/or are considering gifts and other transfers to family members related to your estate plan, you may be affected by the new IRS regulations expected to be released on September 17, 2015. These new regulations may significantly limit valuation discounts used to transfer minority interests in closely held entities to family members and increase the transfer tax cost associated with moving such interests.

You may wish to accelerate your consideration of the transfer of closely held interests to family members (or trusts for the benefit of family members) to take advantage of potential valuation discounts and thus lower transfer tax cost.  These transfers will need to be made by early to mid-September to take advantage of the current laws.  Although regulations are generally effective when finalized, there is some indication that these new regulations may take effect on the proposed regulation release date.  It is also believed that there may be “grandfathering” of previous transfers of interests in such entities only.  In light of the uncertainty, your best course of action may be to finalize and execute on your estate planning transfers prior to September 17, 2015.

We encourage you to contact us to help you determine if it is prudent to complete your transfers of interests before the proposed regulation release date.  Although the details of the proposed regulations remain unknown, our estate planning and corporate attorneys are happy to discuss with you the potential targets of the regulations and how they may affect your overall estate plan.

Al Domanskis   Direct: 312-540-1075   Email: [email protected]

Pamela Belyn   Direct: 312-219-8538   Email: [email protected]