The Chamber of Commerce has endorsed a bill that would stop President Barack Obama’s administration’s new estate tax rules, which they insist would keep those mean wealthy people from reducing value on their assets.
GOP senators proposed legislation to stop these rules because they believe it will harm small and family owned businesses because the owners would not be able to easily transfer the business to future generations.
This is what the administration proposed:
The government’s rules focus on what are known as valuation discounts. When businesses divide their ownership, the government lets them reduce that value for estate tax purposes, and more of the business can thus fit inside the $5.45 million-per-person exemption from estate and gift taxes.
Valuation discounts, often as much as 30% or 50% of the assets’ value, reflect the fact that minority stakes in a business aren’t worth their equivalent share of the entire business. That is because such interests can be difficult to sell, especially if they don’t come with decision-making power.
The rules would make it harder for business owners to get valuation discounts. The rules are prospective and likely won’t take full effect until January at the earliest. Meanwhile, estate planners are urging their clients to consider transferring assets now using the techniques.
Forbes explains further after it spoke with estate lawyer Carlyn McCaffrey, who has clients frantic about the new rules…