Resource Search

Proposed regulations covering the valuation of family controlled entities for transfer tax purposes—12 years in the making—were published by the IRS on August 4, 2016. If newly proposed IRS Regulations are finalized in their current form, nearly all valuation discounts on family controlled entities will be eliminated. Given the December 1st public hearing date on the proposed regulations, there is a brief window of opportunity for families to transfer business and investment assets at a reduced gift tax cost. Now is the time to act.

The long-awaited and much-speculated about regulations to Section 2704 were issued in early August 2016. As issued, the proposed regulations expand the scope and reach of section 2704 to preclude use of various structural techniques to artificially suppress the value of interests in entities transferred by taxpayers or owned by them at death. The IRS is likely to receive a great deal of commentary from the estate planning and valuation communities, respectively. Therefore, the final form of these regulations is difficult to predict at best.

For years, owners of family-controlled companies have taken advantage of applicable valuation discounts to advance their objectives in transferring wealth and company ownership to future generations in a tax efficient manner. On August 2, the Treasury Department issued proposed regulations under Internal Revenue Code Section 2704 to curb the use of valuation discounts in such circumstances. A public hearing on the proposed regulations has been scheduled for December 1, 2016.

When you think about family dynamics, very often there’s a lack of that home team concept and feeling of unity. Establishing that home team within your family early on offers the greatest opportunity for generational success and healthy family governance. The need to prepare the family for the future is particularly important for families that own and run a family business which they hope to pass down to future generations. A five-step process can help families build their home team advantage.

Entrepreneurs are risk takers by nature, leveraging their insight, hard work, and capital to create successful companies. Unfortunately, many entrepreneurs who become business owners don’t think about specific kinds of risk until they’ve experienced a threat first hand. Yet planning ahead is critical to mitigate many different kinds of risk and protect your business from losses. Your own risk exposure will depend on many unique factors—the nature of the business, your own personal tax and financial situation, and estate and business succession planning considerations.

A family constitution—the rule book that defines the vision and principles of a family’s wealth strategy and acts as an operating model—should be as unique as the family itself. The key to developing an appropriate family constitution is not in the ultimate output, but in the collaborative process of developing it. In working together, families often uncover factors which bind them together. However, the process can also elicit confronting discussions about what really matters to individual members.

Behind the scenes of the world’s leading industrial and manufacturing companies, a profound digital transformation is now underway. While terms like the industrial internet or digital factory are also used to describe the journey industrial companies are taking towards a complex value chain transformation, the term ‘Industry 4.0’ stands for the fourth industrial revolution and focuses on the end-to-end digitization of all physical assets and integration into digital ecosystems with value chain partners.