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Tax Alert

ALERT: Company Owners Planning to Transfer Business Ownership to Family Members Should Act Now to Protect Maximum Benefit of Gifting

Business gifting image

August 22, 2016

The US Treasury Department has announced proposed regulations that would limit the discount certain restrictions have historically created on the valuation of a business (both operating and non-operating). When used in estate planning and gifting, these “discounts” allow taxpayers to transfer business ownership to heirs or other family members with lower estate taxes.

The proposed regulations are now in a 90-day comment period, with the IRS scheduled to hold hearings Dec. 1, 2016 and then issue final regulations. However, the Treasury’s intent to eliminate or decrease these discounts is clear – so any business owner planning to transfer ownership of the entity to family members should act immediately to secure the maximum tax benefit for gifting.

If you are a business owner in this position, these are the steps you should take as soon as possible to protect your tax benefits:

  • Review your estate plan to make sure it is current, or update it if needed, to ensure that your gifts go to the people you intend to receive them.
  • Meet with your tax advisor to understand the current value and tax effects of your planned gift, compared with the estate tax liability if the proposed IRS regulations are put into place.
  • Finalize and document your gift with your tax professional, attorney, and other wealth management professionals as soon as possible, with the understanding that the IRS could take action soon after Dec. 1, 2016.

Contact us

To learn more about how these proposed regulations may affect you, please contact your AGH tax professional, or AGH senior vice president of tax services Shawn Sullivan using the information below.

Shawn Sullivan

Senior Vice President,
Tax Services
Shawn serves as one of two primary leaders in the firm’s large tax group. He has extensive public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, wholesale/retail distribution, real estate development and management, construction, and contractor industries. In addition to enhancing business performance to minimize tax consequences, he has experience in mergers and acquisitions and international tax and business structuring.

A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.
Shawn Sullivan
Shawn Sullivan
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NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.