Are Minority and Marketability Discounts Going Away?
In the world of estate and gift taxes, valuation discounts applied to family limited partnership interests have long been a point of contention between taxpayers, their advisors and the IRS. The IRS recognizes that the value of an interest in a privately-held corporation or partnership may be less than the owners pro rata share of the entitys assets. However, by proposing to disallow certain valuation discounts, numerous IRS challenges in the courts have attempted to break the back of family limited partnerships as an effective means of reducing estate and gift taxes for wealthy individuals. The outcomes of various court cases have created uncertainty for the estate planning community and valuation professionals. Previous legislative proposals, including those made by the Treasury Department in 1984 and by the Fiscal Year 2000 Administration Budget Proposal, have attempted to greatly limit the use of minority and marketability discounts. In the last few months, valuation discounts and
