Proposed changes to the 2704 regs will not be finalized until well into next year, most likely, and if Hillary is elected you may not discover how badly you needed the discounts until she gets her lower exclusions several years from now — but the critical point to keep in mind is that, after the election, you have just a few days, from November 9 through November 30 of this year, to utilize a tool, soon to disappear, that may avoid a huge amount of death tax.
One of the main targets of the proposed regulations is the abuse of exceptions applying to the lapse of restriction or liquidation rights through deathbed transfers. Currently, it’s possible for a majority stockholder in a family entity to, for example, make a late-in-life gift to a family member of just enough shares of stock to break his majority. His estate can then claim a lack of control discount on his now-minority share of the company. The IRS maintains that such transfers have basically no economic effect other than to depress the assets’ transfer tax value. Accordingly, the proposed regulations contain a three-year look-back period during which any such transfers or lapses would be considered to happen at death, and would no longer trigger a minority discount.
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