Practice for the law firm of Mattleman, Weinroth & Miller, P.C. She concentrates her practice in the area of estate planning, estate and trust administration, and estate and trust litigation. Ms. Henbest works with individuals, families, and business owners in both New Jersey and Florida on matters involving drafting estate-planning documents, administration of estates and trusts, business succession plans, special needs planning, real estate transactions, and guardianship matters. where he focuses his practice in the areas of trust and estate planning and litigation, probate, business planning/transactions, elder law, special needs planning and IRS matters. 401 Route 70 East, Suite 100 Cherry Hill, New Jersey 08034 856.429.5507 Phone 856.429.9036 Fax jhenbest@mwm-law.com bcohen@mwm-law.com www.mwm-law.com owner has is the business itself. In preparing to file an estate or gift tax return, it is important for the practitioner to not only consider what the value of the business is but also whether any discounts may decrease the value of the business and potentially reduce the tax burden of the business owner. Recently, the valuation of closely held business interests has been a highly scrutinized issue. Most of the time issues as to valuation are contested by the IRS when the business entity has no realistic business purpose other than to achieve preferential tax treatment on the transfer of wealth. fair market value (FMV) of property is generally determined as of the date of the decedent's death (unless an alternative valuation date is elected under IRC § 2032) or as of the date the gift is given. That is, what is the net amount a willing purchaser would pay to a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts? established securities market, the answer to this question is not always readily ascertainable. Revenue Ruling 59-60 provides factors that are considered when determining FMV, but there is no bright line formula. value as of the applicable valuation date are to be considered. used to discount the value of a closely held family business for estate and/or gift tax purposes: lack of marketability, minority interest, and loss of key person. When applied properly, these discounts can be used to effectively, and legally, reduce the value of the business interest that has been transferred. After determining the base valuation of the business interest, it may be appropriate to adjust the FMV using various discounts which are available based on the circumstances. of marketability is defined in the International Glossary of Business Valuation Terms as "the ability to quickly convert property to cash at minimal cost." fact that the business interest is not easily converted to cash as there is no easily accessible market to sell the Business for Estate and Gift Tax Purposes: What Valuation Discounts are Available? |