In an August 19 Wall Street Journal article, Tysons partner Ron Aucutt commented on rules proposed by the Treasury Department and Internal Revenue Service that are intended to limit the use of “valuation discounts” by the wealthy to reduce estate and gift taxes.
According to the article, families whose wealth exceeds certain thresholds often choose to disperse their assets to various individuals and entities so the assets’ value drops for the purposes of taxation. Aucutt noted that, in some cases, a family that makes such changes for tax purposes may wait three years after the tax return is filed — when the statute of limitations for an audit expires — and then redistribute the previously divided assets, thereby avoiding taxes on a substantial portion of the assets’ market value. The proposed rules would allow the IRS to ignore and disallow many of these valuation discounts — a move Aucutt said the Treasury and IRS have the authority to make.
Subscribers can read the full text of the article, titled “The Controversial Way Wealthy Americans Are Lowering Their Estate Taxes.”