Keep Thinking About Family Business Planning As Treasury Changes The Rules

I've written before about the new proposed Treasury Regulations under Section 2704 of the Internal Revenue Code. The new regulations would limit the ability of owners of family businesses and other closely held business interests to transfer a portion of their ownership at a discount. These regulations would change asset transfer techniques that have been used for many years, and that have saved taxpayers many millions of dollars in federal estate taxes and state inheritance taxes. Very basically, if you transfer a minority interest in a business to someone or to a trust or other entity, and that minority interest has no control over the business and can't be sold, it's worth less than the underlying value of the assets transferred. The amount of the discount is established by an expert appraiser. These discount techniques are well-established, but because they generally result in a loss of tax revenue, the Treasury doesn't like them.