AICPA Calls on IRS to Withdraw and Re-Propose Estate Valuation Discount Regulations

Justin P. Ransome (left) and
Michelle Gallagher (right).

The American Institute of CPAs (AICPA) has called on the Internal Revenue Service (IRS) to withdraw and re-propose the estate valuation discount regulations that were the subject of an IRS hearing on December 1 in Washington, D.C.  The proposed regulations concern the valuation of interests in corporations and partnerships for estate, gift and generation-skipping transfer tax purposes.

The two witnesses for the AICPA, Justin P. Ransome and Michelle F. Gallagher, stressed the Institute’s concern that the proposed regulations are “overly broad and general in nature.”  They requested that the proposed regulations be withdrawn, and if the U.S. Department of the Treasury and IRS officials determine regulations are still needed after they review the more than 9,000 comment letters, they should issue new proposed regulations, with another comment period, before any regulations are finalized.  The AICPA witnesses urged that the effective date of the re-proposed regulations be extended until the regulations are finalized. The witnesses testified that the proposed regulations should apply only to family-owned entities that hold passive investments and not to family-owned businesses that carry on a trade or business.  The witnesses also testified on other specific aspects of the proposed regulations.

Ransome, J.D., past chair and current member of the AICPA Trust, Estate, and Gift Tax Technical Resource Panel and the chair of the AICPA Family Limited Partnership Issues Task Force, discussed technical tax topics in his testimony related to the treatment of transfers of an interest in a family-owned business to a family member, exceptions regarding transfers of interests and rules concerning control of an entity. 

Gallagher, CPA/ABV/CFF, chair of the AICPA Accredited in Business Valuation (ABV) Credential Committee and past chair and current member of the ABV Exam Task Force and member of the AICPA Family Limited Partnership Issues Task Force, focused on valuation related issues from a business appraiser’s perspective, specifically concerns about how the proposed regulations redefine the valuation concepts of fair market value, control and marketability.

Read Ransome’s testimony here.  Read Gallagher’s testimony here.

The two witnesses for the AICPA, Justin P. Ransome and Michelle F. Gallagher, stressed the Institute’s concern that the proposed regulations are “overly broad and general in nature.”  They requested that the proposed regulations be withdrawn, and if the U.S. Department of the Treasury and IRS officials determine regulations are still needed after they review the more than 9,000 comment letters, they should issue new proposed regulations, with another comment period, before any regulations are finalized.  The AICPA witnesses urged that the effective date of the re-proposed regulations be extended until the regulations are finalized. The witnesses testified that the proposed regulations should apply only to family-owned entities that hold passive investments and not to family-owned businesses that carry on a trade or business.  The witnesses also testified on other specific aspects of the proposed regulations.

Ransome, J.D., past chair and current member of the AICPA Trust, Estate, and Gift Tax Technical Resource Panel and the chair of the AICPA Family Limited Partnership Issues Task Force, discussed technical tax topics in his testimony related to the treatment of transfers of an interest in a family-owned business to a family member, exceptions regarding transfers of interests and rules concerning control of an entity. 

Gallagher, CPA/ABV/CFF, chair of the AICPA Accredited in Business Valuation (ABV) Credential Committee and past chair and current member of the ABV Exam Task Force and member of the AICPA Family Limited Partnership Issues Task Force, focused on valuation related issues from a business appraiser’s perspective, specifically concerns about how the proposed regulations redefine the valuation concepts of fair market value, control and marketability.

Read Ransome’s testimony here.  Read Gallagher’s testimony here.