Proposed Regulations Would Limit Valuation Discounts: Treasury Department Issues Proposed Regulations Limiting Valuation Discounts on Transfers of Interests in Family-Controlled Entities

Sullivan & Cromwell LLP - August 31, 2016

On August 2, 2016, the U.S. Treasury Department released proposed regulations under Section 2704 of the Internal Revenue Code of 1986, as amended.  If adopted in their current form, the proposed regulations would significantly reduce or eliminate valuation discounts for estate, gift and generation-skipping transfer (GST) tax purposes on transfers of interests in family-controlled entities.  The new rules generally would become effective only after they are adopted as final regulations, which is expected to occur perhaps as early as the first quarter of 2017.