IRS Proposes Rules on Estate, Gift, Generation-skipping Transfer Taxes


October 17, 2016

On August 4, 2016, the Internal Revenue Service (IRS) issued a proposed rule relating to the valuation of interests in corporations and partnerships for estate, gift, and generation-skipping transfer tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Internal Revenue Code section 2704. The rule would affect how taxpayers estimate the fair market value of assets for estate and gift tax purposes.

Ed Note: The American Society of Appraisers has come out against the proposal, while the Appraisal Institute has not taken a position.

The IRS is proposing to eliminate discounts for marketability and control from estate, gift and generation transfer tax treatment, which would have the practical effect of increasing the taxable amount of the estate/gift/transfer. The ASA reported that the increase in transfer taxes could be as high as 25%-50% depending on the valuations and treatments of the estate transfer or gift.

Link to proposed rule: https://www.regulations.gov/document?D=IRS-2016-0022-0001

Comments are due November 2, 2016.

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