Estate & Gift Tax Valuations: Can the IRS Disregard an Agreed Upon Value for Shares in a Buy-Sell Agreement?

Section 2703 of the Internal Revenue Code enacted in 1990 states that buy-sell agreements are disregarded for valuation purposes, unless the agreement satisfies the following tests. Test One: The Agreement Must Constitute a Bona Fide Business Arrangement The buy-sell agreement (Agreement) cannot be a ploy to transfer shares to members of the family at a …

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Not-for-Profit Entities: Use of “Fair Value” for Financial Reporting

Typically the standard of value in the valuation of a fractional interest in an entity for estate and gift tax reporting purposes is “fair market value” which is defined by Revenue Ruling 59-60 as “the price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer …

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Family Limited Partnership Failures

We see a lot of tax cases about family limited partnerships (FLPs) and family limited liability companies (FLLCs) that have bad facts that ultimately lead to the loss of any valuation adjustments for estate and gift tax purposes (e.g., discounts for lack of control or lack of marketability). Some of the more common “bad facts” …

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