Treasury Wants to End Tax Deal for Some Family-Owned Businesses

 “Valuation discounts have always been the icing on the cake for these tax transfers that we do,” said Scott Goldberger, estate and trust principal at the accounting firm Kaufman Rossin in Boca Raton, Fla. “If the primary goal is to push future appreciation of the business onto family members, thereby reducing the value of the taxable estate, the discount gives you a head start.”

Apart from the discount, there are two effective strategies to move money or business interests to heirs.

The first is simply getting assets that are going to appreciate out of a person’s estate. If the gift is over the exemption amount, the person may have to pay gift tax. But after that, all future appreciation will grow outside of his or her estate.

The second is to put those assets into what is called a grantor trust, which benefits future recipients by allowing the person making the gift to pay all the income taxes in the trust.

“Those two in tandem will typically outweigh the tax savings you’d get from a discount,” Mr. Goldberger said. “Even after these regulations are finalized, we think we’ll still be seeing a lot of our clients doing this type of planning.”

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Scott Goldberger, JD, is a Estate & Trust Principal at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S.