On Monday (1/9/17), while speaking to the Heckerling Institute on Estate Planning in Orlando, Florida, Kathy Veihmeyer Hughes of the Treasury Department’s Office of Tax Policy, provided a status update of proposed regulations reducing valuation discounts for estates. While the statement remains unofficial, key points made by Hughes include:
  1. There will not be an attempt to revise and finalize the proposed regulations before President-elect Trump’s Inauguration, as some have feared. Part of the reason cited for the delay was the large number of comments received at the December hearing that Treasury is still digesting.
  2. The regulations are NOT intended to do away with minority interest discounts.
  3. The regulations do NOT require valuations always be made in conformity with a deemed put right.
  4. The three year rule which addresses transfers occurring within 3 years of death in estate tax valuation adjustments will NOT be retroactive to transfers made before the effective date of the final regulations.
  5. The regulations will NOT have an effective date prior to the date of issuance of the final regulations, and for some, prior to 30 days after issuance of the final regulations.
This statement from Treasury quells fears that the regulations could be finalized in the last hours of the current administration. While this news is certainly positive for our efforts to beat back these regulations, there is still a level of uncertainty whether the Section 2704 proposed regulations will ever be finalized.