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Author: Reed W. Easton
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Family Limited Partnerships ("FLPs") and Limited Liability Companies ("LLCs") are commonly used in estate planning to transfer real estate, marketable securities or other assets to family members with valuation discounting used in determining the gift or estate tax consequences. Parents retain control over their assets under the terms of the FLP or LLC agreement while reducing the potential estate tax applicable thereto through the use of valuation discounts attributable to the FLP or LLC interests. Recently, the IRS has been aggressively using Section 2036 in estate tax cases to attack the FLP and LLC strategy for valuation adjustment. A new decision overshadows all the former decisions in its expansive interpretation of Section 2036 (a) (2). This article will look at that decision Estate of A. Strangi TC Memo 2003-145 (May 20, 2003) (i.e. "Strangi II") and identify possible practitioner responses. These possible responses will address current estate planning as well as what the practitioner might do with existing FLPs/LLCs and in the event of a gift or estate tax return examination. Lee Iacocca has been quoted as saying - "We are continually faced by great opportunities brilliantly disguised as insoluable problems." This article is directed to identifying those available opportunities. The FLP/LLC Technique has been around for more than eight years and now the retention of control may avoid any possibility of a valuation discount. Should bad facts be allowed to make bad law? What is the effect of Strangi II on future estate planning? Those parents who already have existing FLPs/LLCs have available alternatives to choose from. What does the new Strangi II decision mean prospectively to the practitioner and his or her clients?
Author: Reed W. Easton
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Family Limited Partnerships ("FLPs") and Limited Liability Companies ("LLCs") are commonly used in estate planning to transfer real estate, marketable securities or other assets to family members with valuation discounting used in determining the gift or estate tax consequences. Parents retain control over their assets under the terms of the FLP or LLC agreement while reducing the potential estate tax applicable thereto through the use of valuation discounts attributable to the FLP or LLC interests. Recently, the IRS has been aggressively using Section 2036 in estate tax cases to attack the FLP and LLC strategy for valuation adjustment. A new decision overshadows all the former decisions in its expansive interpretation of Section 2036 (a) (2). This article will look at that decision Estate of A. Strangi TC Memo 2003-145 (May 20, 2003) (i.e. "Strangi II") and identify possible practitioner responses. These possible responses will address current estate planning as well as what the practitioner might do with existing FLPs/LLCs and in the event of a gift or estate tax return examination. Lee Iacocca has been quoted as saying - "We are continually faced by great opportunities brilliantly disguised as insoluable problems." This article is directed to identifying those available opportunities. The FLP/LLC Technique has been around for more than eight years and now the retention of control may avoid any possibility of a valuation discount. Should bad facts be allowed to make bad law? What is the effect of Strangi II on future estate planning? Those parents who already have existing FLPs/LLCs have available alternatives to choose from. What does the new Strangi II decision mean prospectively to the practitioner and his or her clients?
Author: Brant J. Hellwig
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In this report, Professor Hellwig examines the application of section 2036 to family limited partnerships in the context of the Fifth Circuit's recent opinion in Kimbell v. United States. After describing how the government developed section 2036 into an effective tool in combating the use of family limited partnerships to generate transfer tax savings, the report details how the Fifth Circuit's interpretation of the adequate and full consideration exception to section 2036 in Kimbell severely curtails the government's position. The report concludes with criticisms of the Kimbell decision, namely that the court failed to properly follow its own precedent in Wheeler v. United States and that the court failed to consider the legislative purpose behind section 2036 in interpreting the adequate and full consideration exception.
Author: David T. Lewis
Publisher: American Bar Association
ISBN: 9781590318171
Category : Business & Economics
Languages : en
Pages : 350
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Book Description
Forming and funding a family limited partnership or limited liability company is both increasingly common and complicated. This current, comprehensive reference provides in-depth analysis of all facets of using these planning vehicles. It begins with detailed guidance on the basic principles of drafting, forming, funding, and valuing an FLP or LLC, but also covers advanced income tax concerns. Added tools include examples and extensive sample forms on CD-ROM.
Author: Reed W. Easton
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The Fifth Circuit in Strangi III upholds the Service's use of Section 2036(a)(1) to attack Family Limited Partnerships ("FLPs") as valuation discount vehicles, but leaves open the question of whether Section 2036(a)(2) may also be used. The prior decision in the Strangi series (Strangi II) overshadowed all former decisions in its expansive interpretation of Section 2036(a)(2). The most recent decision (Strangi III) holds that the transferred assets were properly included under Section 2036(a)(1), and therefore the court did not need to reach the Service's alternative contention under Section 2036(a)(2). Does that foreclose the Service from raising Section 2036(a)(2) in circumstances in which Section 2036(a)(1) or the bona fide sale exception contained in Section 2036(a) do not apply? This article closely analyzes Strangi III in light of the protracted and complex history surrounding this long-awaited decision and identifies possible practitioner responses.
Author: Gersham Goldstein
Publisher: Warren Gorham & Lamont
ISBN:
Category : Taxation
Languages : en
Pages : 956
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Book Description
This multi-volume bibliography lists evey significant article on federal income, estate, and gift taxation since 1913. Over 36,000 articles are cited in reverse chronological order organized by topic and author.
Author: Layne T. Smith
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The author analyzes how the exception to section 2036 for bona fide sales is currently applied to family limited partnerships and family limited liability companies. He concludes that this exception should only apply to transfers to such entities when the transfer is made in the ordinary course of business, meaning that there is sufficient evidence to show it is bona fide, at arm's length, and free from any donative intent. The author further contends that the bona fide sale exception cannot be justifiably applied to transfers to FLPs or FLLCs on the traditional grounds that the discounted partnership interest replenishes the estate.
Author:
Publisher:
ISBN:
Category : Tax accounting
Languages : en
Pages : 812
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Book Description
Author: Shannon P. Pratt
Publisher: McGraw Hill Professional
ISBN: 0071509356
Category : Business & Economics
Languages : en
Pages : 1144
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Book Description
Capitalize on All the Latest Legal, Financial, and Compliance Information Needed to Analyze and Appraise Any Business For over 25 years, Valuing a Business has provided professionals and students with expert business valuation information, offering clear, concise coverage of valuation principles and methods. Over the decades, the book's unsurpassed explanations of all valuation issues have made it the definitive text in the field, against which every other business valuation book is measured. Now updated with new legal, financial, and compliance material, the Fifth Edition of Valuing a Business presents detailed answers to virtually all valuation questions_ranging from executive compensation and lost profits analysis...to ESOP issues and valuation discounts. Written by Shannon Pratt, one of the world's leading authorities on business valuation, this updated classic offers a complete “one-stop” compendium of information on the full range of valuation concepts and methods. Valuing a Business contains step-by-step discussions and analyses of: Business Valuation Standards and Credentials Defining the Assignment Business Valuation Theory and Principles Gathering Company Data Site Visits and Interviews Researching Economic and Industry Information Analyzing Financial Statements Financial Statement Ratio Analysis Income, Market, and Asset-Based Approaches to Valuation The Capitalized Excess Earnings Method Premiums and Discounts Writing and Reviewing Business Valuation Reports Valuing Debt Securities, Preferred Stock, Stock Options, and S Corporation Stock Valuations for Estate and Gift Tax Purposes Buy-Sell Agreements Valuations for Income Tax Purposes Valuation with Employee Stock Ownership Plans Valuations for Ad Valorem Taxation Dissenting Stockholder and Minority Oppression Actions Valuations for Marital Dissolution Purposes Litigation Support Services Expert Testimony Arbitration and Mediation This landmark reference also presents a wealth of recent court cases for each valuation area, which together provide a comprehensive overview of all the legal rulings and trends in the field of business valuation.
Author: Brant J. Hellwig
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This report analyzes the potential application of section 2036(a) to limited partnerships employed for estate planning purposes, using the facts of Tax Court case of Estate of Strangi v. Commissioner as a guide. Particular emphasis is placed on the Commissioner's argument for inclusion under section 2036(a)(2) based on the taxpayer's control over the property transferred to the partnership, as well as the taxpayer's argument under the Supreme Court case of United States v. Byrum that the existence of the taxpayer's fiduciary duty to the partnership negates the application of section 2036 altogether. The report concludes that, because the essential facts of United States v. Byrum are lacking in the estate planning partnership context, the Byrum decision should not shield taxpayers using limited partnerships as a trust substitute from the application of section 2036(a)(2).
Author: Mitchell M. Gans
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Family limited partnerships are a widely used estate-planning tool. Recently, however, the Tax Court has begun using an unconventional approach in attacking abusive partnerships, section 2036. While, in the early cases, the court used section 2036(a)(1) to deny partnership discounts, the court in Strangi broke new ground in its use of section 2036(a)(2) as an alternative ground for disregarding the partnership. If Strangi's reading of section 2036(a)(2) is sustained - and the Fifth Circuit's recent decision in Kimbell suggests that it will be - lawyers will have to reconsider the ways in which they structure new partnerships. In addition, in many cases, existing partnerships will have to be restructured in order to avoid a section 2036(a)(2) attack. The article examines the Strangi decision, critiquing the court's analysis. It then goes on to suggest how new partnerships should be structured, and how existing partnerships should be restructured, in order to neutralize the section 2036(a)(2) threat that the decision poses.
