Minority and marketability discounts are important benefits in transfer tax planning for clients with closely held family entities, including limited partnerships (LPs), limited liability companies (LLCs) and closely held corporations. However, these discounts – which allow for significant transfer tax savings – may expire in the near future.
As you may already know, the proposed regulations under Internal Revenue Code Section 2704 were issued by the Department of the Treasury on August 2nd, with a hearing to discuss the regulations scheduled for December 1st. Many practitioners predict that the available discounts for transfers of closely held interests between family members may be completely, or mostly, eliminated.
We expect taxpayers to have until the end of 2016 to take advantage of these discounts while they remain available, and therefore urge clients to act quickly if they have a family business and transfer tax planning is something they have considered.