A Dec. 1 hearing in Washington, D.C., on the Internal Revenue Service’s proposed estate valuation discount regulations proved as well-attended – and opposition-heavy – as expected. McGuireWoods private wealth services lawyers Ron Aucutt and Dennis Belcher presented testimony, with some comments captured in national media.
Known as REG-163113-02, the proposed tax code rules the IRS recommended in August would change the valuation of interests in family-owned businesses for purposes of estate, gift and generation-skipping transfer taxes.
At the hearing, partners Aucutt and Belcher advocated for a “carve out” in the rules for operating businesses. The proposed rules “use a shotgun approach when a rifle approach is more in order,” Belcher is quoted as saying in a Dec. 2 Forbes article. They suggest that the new rules target passive business structures or family limited partnerships holding securities, which are more vulnerable to abuse, not entities that are still operating as family businesses.
Days in advance of the hearing, a Nov. 28 Bloomberg BNA article quoted Belcher on the public reaction to these controversial regulations: “I cannot recall in recent memory a set of proposed regulations that have created the response that these regulations created.” Although President-elect Trump is expected by many to oppose the tax measure, Belcher said “[w]e cannot assume that there’s going to be no transfer tax,” and he predicted a heavy turnout at the hearing.
And he was right. The IRS received more than 9,000 comments on the regulations during the public comment period, with more than 35 commenters presenting testimony in person.