A Brief Update on the IRS Proposed Regulations to Eliminate Gift and Estate Planning Discounts


In August 2016, the IRS has released proposed regulations that would drastically reduce the tax advantages of certain estate planning strategies many dealers use. If enacted, the new regulations would lower or eliminate estate and gift tax discounts (those allocated for lack of marketability and lack of control) that previously were permitted on the transfer of interests in family-owned corporations, partnerships, and LLCs. For many family business owners, this will mean paying much higher gift and estate taxes when transferring business ownerships to heirs. These regulations could possibly take effect early this year.

In fall 2016, the Dealership Industry Group at HBK CPAs & Consultants (HBK) conducted a webinar outlining the details of these proposed regulations and offered potential steps dealers could take to mitigate their impact. Since then, Donald Trump was elected President, which is likely to change the course of many rules, policies and laws, including these proposed regulations. In fact, in light of President Trump taking offices, it seems unlikely that these regulations will even be finalized.

The Trump administration is proposing changes in the estate tax arena though it is too early to tell whether or not these changes will be enacted.

Still, even though it’s always prudent to have a strategic estate and succession plans in place, the urgency for many dealers to complete family business transfers quickly has waned.

HBK will alert our clients, colleagues and associates of breaking news related to these proposed regulations. Contact us with questions on this or related issues, we are here to help.