Tuesday, February 14, 2017

Apparent End to the Proposed IRC Section 2704 Regulations

Today’s post will shed light on two of the main Wealth Preservationist topics throughout the last few months. Specifically, the proposed IRC Section 2704 Treasury Regulations (see posts dated August 15, 2016 and November 29, 2016); and tax implications of the Trump Administration (see posts dated December 6, 2016 and December 20, 2016).

After months of uncertainty regarding the proposed regulations, it appears that the election and inauguration of Donald Trump means the end for the proposed regulations. As a quick recap, the proposed IRC Section 2704 Regulations sought to eliminate traditional (and significant) discounts for estate tax purposes available to family controlled entities.

The primary reason for the apparent end to the regulations is the failure of the IRS to exclude active businesses from the reach of the proposed regulations, rather than target the investment based family controlled entities that serve no active business. This failure to make an exception for active businesses led to significant public backlash as success of family controlled businesses can be vital to creation and sustainment of jobs within this country.

Although owners of family controlled entities benefit from the apparent end to the proposed regulations, business succession is still an extremely important component of one’s estate plan. If you are an individual with a family controlled entity, it may be advisable to contact our office to ensure that such business is properly incorporated to fit within your overall estate plan. 

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