IRS Proposes New Regulation Affecting Transfers to Next Generation

IRS Proposes New Regulation Affecting Transfers to Next Generation

CliftonLarsonAllen Principal and FarmCPA Today blogger, Paul Neiffer warns that a recent IRS proposal may eliminate some or nearly all of the discounts that family farms or ranches can take via the transfer of land or operations.

Neiffer: "The IRS earlier this month issued a proposed regulation — this is not final it's proposed — essentially it is going to reduce or eliminate the ability for farm families to make transfers to the next generation and take a minority discount. Essentially when a person transfers an interest that is less than 50 percent as an valuation we can deduct 15, 20, 25 percent off the value and arrive at a lower value for estate tax purposes and gift tax purposes. The IRS is proposing to eliminate these types of discounts for almost all family transfers — especially if it occurs happens within three years of death or even any family transfer they are proposing to eliminate the minority interest discount."

Neiffer urges farm families with large land holdings to consider action now rather than later.

Neiffer: "For our farmers that have a fair amount of land and are looking at a estate tax liability, what they should definitely consider is discussing with their advisor is making lifetime gifts right now because this proposed regulation — if it goes into affect — it won't likely go into affect to earlier next year. They may save their heirs several million dollars if they do it now."

Farm CPA Today is one of my favorite informative blogs, if you haven't yet visited it, go to Farm CPA

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