CURRENT CHALLENGES TO THE FAMILY LIMITED PARTNERSHIP SCHEME FOR ESTATE PLANNING

Increased attacks on the legislative front to severely limit or even eliminate the ability to discount in FLPs can also be expected. These will almost certainly include resurrecting the Treasury proposal to eliminate or severely limit the discounting of partnership unit values. While there have been...

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Bibliographic Details
Published inPractical Tax Strategies Vol. 92; no. 1; p. 16
Main Authors Polese, James F, Feldman, Ira S
Format Trade Publication Article
LanguageEnglish
Published Boston Thomson Reuters (Tax & Accounting) Inc 01.01.2014
Subjects
Agreements
Estate planning
Estate taxes
Fair market value
Families & family life
General partners
Limited partnerships
Partnership interest
State court decisions
Tax courts
United States > US
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Summary:Increased attacks on the legislative front to severely limit or even eliminate the ability to discount in FLPs can also be expected. These will almost certainly include resurrecting the Treasury proposal to eliminate or severely limit the discounting of partnership unit values. While there have been a number of recent taxpayer victories, it is increasingly difficult to reconcile the decisions of the Tax Court. One gets the uncomfortable feeling that the court reaches a decision based on some gut feeling and then spends pages of the opinion justifying its result. It is very difficult to articulate a coherent rationale as to why the taxpayer in Estate of Liljestrand should lose and those in the Estate of Kelly or Stone should prevail. It remains to be seen if the IRS will finally relent on the issue of valuation adjustment clauses approved in Wandry. As matters now stand, it certainly is worth the effort of trying to take advantage of the decision in formulating gifts of FLP interests or other difficult-to-value assets. It may be that with the preservation of the $5 million estate and gifttax exemption, the IRS will focus on matters more likely to produce tax revenues rather than arguing over valuation adjustment clauses.
ISSN:1523-6250