We have established,through a Professional appraisal,our equity. We have two classes of shares ,Voting(25%) & Non voting (75%). My wife & I have the voting . What discount can be applied for : Minority Interest; Lack of Marketability Discount(LOMD) & Non Voting discount.
We are thinking,based on all the cases & other guidelines, a combined discount of 50%.
What is your advice?
There is an expression in legal fields that "pigs get fat and hogs get slaughtered." I, too, have heard of people taking 50% valuation discounts. I think that is an aggressive posture and you might be asking for an audit. You have a fairly complex arrangement, here, and it does not make sense to do this without consulting a tax attorney to make sure that you handle everything correctly.
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Estate Planning Attorney
You should have an appraisal done for both the value and the discounting. I often recommend having the appraisal done every other December so that you can use it December and January.
THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mrs. Cook is licensed to practice law throughout the state of California with offices in San Diego County. She is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
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