Small business owners in North Carolina may breathe a sigh of relief upon learning that the proposed valuation rules for family businesses will be withdrawn by the Treasury Department. The rules were proposed in August 2016 and would have greatly limited discounts in value that business owners claim in order to pass their businesses on while minimizing their estate and gift taxes.
The rules, which were called “Restrictions on Liquidation of an Interest for Estate, Gift and Generation-Skipping Transfer Taxes,” fell under Sec. 2704. They would have limited the valuation discounts that business owners currently enjoy when they transfer family businesses to their heirs upon their deaths. The rules would have meant that families would face more gift and estate taxes, and they would have disrupted their abilities to conduct wealth transfer planning.
With the Treasury Department’s announcement of the rule withdrawal, people can continue working on wealth transfer strategies so that they can pass their businesses to successive generations with a minimal amount of taxes. The withdrawal of the rules shows that the administration is focused on ending estate taxes. Whether or not estate taxes will be ultimately repealed will depend on Congress, however.
People who have estates that exceed the estate tax exclusion amount may benefit by seeking advice from experienced attorneys to help them with structuring their estate plans in such a way as to minimize the amounts that their families might otherwise have to pay to the IRS. The assessment of estate taxes can take a large chunk of assets from an estate and away from the heirs. Attorneys who keep current with the changes in the tax laws may help their clients to devise estate plans that can help them to preserve more of their wealth.