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New Discount Restrictions on Family Wealth Transfers

08.24.16

On August 2, 2016, the Treasury Department issued new proposed regulations under IRC Section 2704 that limit valuation discounts associated with transfers of investments and businesses owned through interests in family partnerships, limited liability companies, and other family owned entities. These proposed regulations are first subject to public comment through December 1st, and will become effective 30 days after final regulations are published in the Federal Register. These regulations, if enacted as proposed, will limit the use of valuation discounts for most transfers of interests in family owned entities.

Last year, we reported that the IRS has long battled the valuation discounts associated with gifts and sales of wealth held in family limited partnerships and limited liability companies without much success, and that Congress has given the Treasury authority to write regulations in this area. Family transfers that are in process or being considered should be completed before year end to maximize benefits of the valuation discounts.

For additional information on this topic, please contact your BPM Tax Advisor, call (415) 421-5757, or email bpm@bpmcpa.com.

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BPM is one of the largest California-based accounting and consulting firms, ranking in the top 50 in the country. It has served the San Francisco Bay Area's emerging and mid-cap businesses, as well as high net-worth individuals, since 1986. Our Private Client Services group assists high net-worth families, executives, and business owners seeking integrated tax strategies. By understanding your needs and goals, we are able to craft intelligent, personalized tax roadmaps that minimize your risks and maximize your peace of mind. For more information or to learn how we can help, contact Sandy Murray, CPA at (415) 288-6223 or Rich McDonnell, CPA at (650) 855-6880, or visit us at our website.