Over this past summer, the Internal Revenue Service finally released its proposal for new regulations under Section 2704 of the Internal Revenue Code. These proposals are far-reaching and will implement significant changes regarding businesses, taxes, and estate planning. While it is yet to be seen whether the proposed regulations will be adopted as is, the hearing is scheduled for December 1, so if enacted, the regulations may go into effect in the start of next year. This means that just in case, people may want to take action before this year’s end to protect themselves in the event the proposal is enacted.
The proposed regulations are legally dense and complex and it is important to have an attorney who understands tax and estate planning laws fully explain the implications of any changes to your specific situation. The following is only a brief description of the potential changes.
Currently, tax discounts are available for a person to gift over business interests if there is either a lack of marketability or lack of control. This has presented a popular estate planning opportunity for many people to gift their business interests in family businesses or closely held businesses to reduce the value of their estate.
In short, the IRS proposal targets these specific discounts and seeks to either eliminate or significantly restrict the discounts for family or closely held businesses. This means that if the regulations take effect, many people will need to develop new tax strategies with regard to their family business interests. In the meantime, it may be wise for anyone considering such a tax strategy to go ahead and make the transfer before the end of the year and before any regulations and restrictions officially take effect.
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If the new ruling goes into effect, it will greatly impact the way many families go about their estate planning in regard to their business interests. It is critical that you have a highly skilled estate planning attorney handling your affairs who stays apprised of all new developments in tax and estate planning laws. Your attorney should regularly review your estate plan in light of new legal developments and help you make any necessary adjustments as soon as possible. To discuss your estate planning needs, please call the law office of Bowne Barry & Barry in New Jersey today.