Chris Treharne of Gibraltar Business Valuations recently testified before
the Treasury Department regarding an IRS regulation that may dramatically
reduce the ability to apply valuation discounts to intra-family transfers
of interest for corporations, partnerships, or LLCs. Simply put, such
regulations would place significant restrictions on the lack of control
discounts in valuing interests, and may have an effect on marketability
discounts. Individuals who own businesses with family members as minority
interests fear that the regulations may impede on future business plans.
Threatening the Hard Work of Local Business Owners
The regulation is placed under Section 2704, which was implemented more
than 20 years ago in an effort to limit discounts for certain family partnerships
or LLC interests that are transferred to family members. Testifying alongside
Chris Treharne was a client of Gibraltar Business Valuations, who started
a family-operated motel business in 1962 and has since then brought her
children aboard her business venture.
In her testimony, she argues that the IRS’s application of family
attribution could result in her minority interests – her three children,
herself, her husband, and her trusts – being valued as if they were
controlling. Under the regulation, these interests would potentially face
estate tax increases her descendants would be unable to pay, unless they
sold the business. While the proposed regulations are not effective immediately,
they do apply to transfers made after the regulations are finalized.
Contact us to read a copy of the full testimony.
At Gibraltar Business Valuations, our motto is “Passion for Valuation.”
We have a passion for what we do and making sure our clients receive unparalleled
service in all of their business valuation matters. If you have questions
regarding the value of your business, we invite you to contact our Denver
& Chicago business appraisal experts today.
Call (855) 231-1401 to
request your case evaluation today.