The IRS has issued some proposed regulations for comment regarding Section 2704 of the U.S. Tax Code. If you aren’t up to speed on your tax sections, Section 2704 is a provision that applies to (among other things) the concept of the family limited partnership (FLP), a tool for families to use to pass wealth to the next generation. For years, high-wealth families (and the lawyers that represent them) have been using a technique known as a “valuation discount” to obtain tax savings for the next generation as part of the process.
The IRS has taken notice, and the new proposed regulations largely do away with this technique. Assuming they are implemented as proposed, by the end of 2016, a number of useful estate planning strategies for high-wealth (over $10M for a couple, $5M for an individual) families will be gone. Thus, if you find yourself in this category, the time for you to take advantage of some of these strategies is rapidly closing. Act now, before it is too late, by calling Learned Lawyer today!