In our most recent column, in the July Investor, we wrote about estate and gift tax discounts -- amounts subtracted from some hypothetical valuation of property in order to determine the actual value subject to tax. One of the cases on which we reported, Estate of Welch v. Commissioner (May 6, 1998), involved the proper discount to be applied to be applied in the valuation of corporate stock, in order to reflect the impact of potential corporate taxes. We focused on the additional income tax burden that arises from fact that, in the case of property (including real estate) held through a "C corporation," a full corporate income tax will often be payable if the corporation disposes of the property, even after the individual's death. In light of changes made by the Tax Reform Act of 1986, it is now, difficult, if not impossible, to avoid this corporate income tax. Accordingly, a buyer of stock will generally apply some discount for this inherent tax, compared to the amount that would
