Treasury Releases Long Awaited Regs on Family/LP’s!

Yesterday, the US Treasury Department released long anticipated guidance under IRC Section 2704 designed to close tax preferences on the valuation of certain interests in family limited partnerships and limited liability companies for estate, gift, and generation-skipping tax purposes. The proposed regulations are broad and comprehensive and will restrict the use of planning techniques involving minority and marketability discounts.

Please see attached a more detailed analysis of the guidance, including the new class of “disregarded restrictions” that would be ignored in determining value.  Note that the proposed regulations are subject to a 90-day public comment period. The IRS will hold a hearing on the proposed regulations on December 1, 2016 and will then incorporate any comments before issuing final regulations.

Treasury issued the following blog characterizing the proposed guidance as the “closing of a loophole that allows some wealthy families to avoid paying their fair share in estate taxes”:

Over the coming weeks, PATG will be working closely with our Congressional supporters and key stakeholders in developing comments and suggested changes to the proposed regulations.