Treasury Department Issues Proposed Regulations Impacting the Valuation of Family-Owned Businesses

For years, owners of family-controlled companies have taken advantage of applicable valuation discounts to advance their objectives in transferring wealth and company ownership to future generations in a tax efficient manner. On August 2, the Treasury Department issued proposed regulations under Internal Revenue Code Section 2704 to curb the use of valuation discounts in such circumstances. A public hearing on the proposed regulations has been scheduled for December 1, 2016. If adopted, these regulations will result in increased wealth transfer taxes (i.e., estate and gift taxes) for owners of family-controlled companies.