When making estate planning transfers of business interests, one risks an IRS audit imposing gift tax consequences. Why? Because valuation involves judgment calls with which the IRS may disagree. To try to protect against adverse audit results, taxpayers may use formulas to define their transfers. Some formulas have protected taxpayers; others have not. Two 2020 tax court cases found certain formula transfers fatally flawed.
Some formula clauses involve excess values passing to charity or spouses. Other formula clauses define the purchase price so that the taxpayer is assured of transferring the entire business interest. Disclaimers may also work.
NOTE: In addition to being accredited for CPE, CLE credit will be available for California, Illinois, and Missouri.
Steve has drafted trusts and a full range of estate planning documents for clients to help grow, preserve, and transmit their family wealth. He has also drafted organizational documents for limited liability companies, corporations, and partnerships to implement their owners' wishes regarding current and future control and transmission, including bringing in new owners and facilitating exit strategies.
Steve enjoys helping clients structure their affairs to achieve their personal, business, and financial goals while reducing the drag that taxes imposed on them. His firm provides full service to businesses; however, he also acts as counsel on specialized matters while cooperating and facilitating the continued involvement of an existing legal, accounting, and financial services team. Steve maintains his CPA license but prefers to refer income tax returns to practicing CPAs.
Steve Gorin is the former president and an ongoing contributor to strategic initiatives of Covenant Place, a senior affordable housing community with a groundbreaking model for integrated residents with the surrounding community and facilitating holistic services to enrich their lives.
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