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Earlier this month, the Treasury Department identified controversial estate tax regulations proposed in 2016 as burdensome and eligible to be substantially modified or repealed. The proposed estate tax regulations target intra-family transfers and valuation discounts that result from lapsing rights and restrictions on liquidations. The regulations would limit valuation discounts - resulting in greater estate tax liability for closely held family businesses, as well as imposing new risks on the continuity of family-owned real estate businesses. In addition to threatening the transfer of family-owned businesses from one generation to the next, the regulations would impair the job creation and economic growth driven by these businesses.
Treasury’s notice came in response to an executive order issued in April 2017 asking the Department to identify burdensome regulations. Following a comment period, the Treasury Department is required to recommend “specific actions to mitigate the burden imposed by regulations identified in the interim report” by September 18
NMHC/NAA strongly support
Treasury putting the proposed estate tax regulations under review and we will
continue to advocate that Treasury withdraw these regulations. Notably, the
industry weighed in on the regulations when they
were first proposed and also identified them in a letter to President Trump covering
regulations that should be rescinded.
Treasury’s goal in proposing to the estate tax regulations was
ostensibly to limit valuation discounts of interests in family owned businesses
so that they may become subject to the estate tax. Under current law, estate
tax exclusion is $5.49 million or $10.98 million per couple. Valuation discounts
may enable ownership interests to fall short of these thresholds, enabling
estates to be shielded from liability. A limitation on valuation discounts
could cause estates to become subject to tax liability or further increases
taxes owed. The regulations were proposed to apply to lapses of rights or
transfers of property subject to restrictions created after October 8, 1990,
occurring on or after the date these regulations are finalized.
Staff Resource
Related Articles
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- Trade Group Coalition Letter to House Ways and Means Committee Opposing Proposed Tax Increases
- Family Business Estate Tax Coalition Letter Expressing Support for Stepped-Up Basis
- Family Business Estate Tax Coalition Letter in Support of Thune Amendment 3106