The Treasury Department and the IRS have announced that proposed regulations that would have drastically limited valuation discounts for transfers of family businesses are being withdrawn.The regulations would have curbed valuation discounts commonly used when family business owners transfer minority shares to other family members.The withdrawal means that family business owners will still be able to transfer a portion of their business to their children while applying valuation discounts.
Primarily, those discounts include adjustments for lack of control and lack of marketability.Proponents argued that such valuation discounts are fair and legitimate because a minority transfer does not provide children with a controlling interest in the business and those shares cannot be readily sold like publicly traded stocks.The U.S. Treasury initiated the withdrawal in response to President Donald Trump’s executive order directing a reduction in regulatory tax burdens.
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