Proposed Tax Code Changes Could Cost Family-Owned Businesses Dearly
On August 2, the IRS issued proposed regulations regarding Section 2704 of the Internal Revenue Code. This could reduce or disallow the discounts on non-controlling interests in many family-owned and controlled businesses.
In practical terms, what this means is a significant increase in taxes owed — to the tune of 25 to 50 percent — when one transfers an interest in a family-owned company for gift and estate tax purposes.
A public hearing is scheduled for December 1 and we expect significant opposition to the proposed regs. There are also two proposed bills (HR 6100 and s 3436) in Congress trying to stop the proposed regs from taking effect.
BIA/Kelsey’s valuation team will host a webinar on this topic next Monday at 2EST. Listen to arm yourself with information and make an informed decision regarding your business.