781.708.4445

info@levinedisputeresolution.com

Divorce Mediation Blog

Rule 2704 Opposition - Talking Points

Wednesday, November 23, 2016

Recently, we blogged about the Internal Revenue Service proposed new section 2704 rules, which if enacted in their current form would create a new minimum value for businesses subject to intra-family transactions, and essentially eliminate discounts for marketability in that context.

Many in the business appraisal and estate planning communities are up in arms, and they mobilizing to defeat this IRS move, before it becomes entrenched.

While keeping an eye on unfolding commentary, we ran across “talking points” suggested by the American Society of Appraisers for use in opposing the new regulations. In summary they are:

  1. By increasing the value of fractional interests in family businesses, the new rules would result in an "stealth" tax increase of 25-50% in estate and gift taxes.
  2. By treating intra-family actors as "known parties", rather than hypothetical buyers and sellers, the rule would disregard the reality that a fractional interest is in fact, fractional, and not controlling, reducing its economic value.
  3. The notion that families will always work in concert has been rejected previously by the United States Supreme Court.
  4. The suggestion that intra-family transfers should be treated differently than those between unrelated parties is unsupported by any public reasoning advanced by the IRS.
  5. The proposed rule may put IRS regulations on a collision course with various state laws which recognize applicability of marketability discounts.
  6. This new approach will cause family-owned businesses to delay capital investment, and inhibit new hiring, as they preserve cash for pain increased taxes.

As divorce mediators and arbitrators, a former Probate judge, and litigators-in-recovery, we are used to this approach from Bernier, in the divorce context, but in estate and gift taxation?

What do you think?



Get e-mail notifications of new blog posts! Enter email address below.:



Delivered by FeedBurner

other articles


recent posts


tags

lawyer facilitated negotiations Matrimonial Arbitration mediator divorce judgment Divorce Agreements litigation divorce process Major League Baseball Arbitration divorce arbitrators family mediation alimony orders alimony reform legislation family support Massachusetts alimony lawyer-attended mediation alimony statute divorce arbitration Chouteau Levine mediators child support DOMA pre-ARA alimony COLA disputes family law mediation Same Sex Marriage family law arbitrator med-arb Levine Dispute Resolution Levine Dispute Resolutions Massachusetts Lawyers Weekly mediation arbitrators how baseball arbitration works Massachusetts divorce mediators Defense of Marriage Act divorce agreement Act Reforming Alimony in the Commonwealth divorce litigation SJC IRC §2704 alimony law divorce mediators Child Support Guidelines arbitrator divorce mediation The Seven Sins of Alimony Boston self-adjusting alimony med/arb General term alimony Cohabitation Baseball Players family law special master traditional negotiations Baseball Arbitration conciliation health coverage Obamacare alimony divorce arbitrator divorce lawyers Divorce medical benefits fraud Massachusetts private dispute resolution divorce and family law LDRC Twinkies Baseball Levine Dispute Resolution Center family law arbitrators mediations Massachusetts lawyers rehabilitative alimony Alimony Reform Act Family Law Arbitration Levine Dispute Resolution Center LLC resolve disputes divorce and family law mediators divorced divorce mediations lawyers support orders dispute resolution MLB labor agreement family and probate law disputes Massachusetts alimony and child support separation divorce mediator health insurance annulment Self-adjusting alimony orders high-risk methodology Uniform Arbitration Act Massachusetts Alimony Reform Act arbitration