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Estate Tax : Valuation:
The value is the fair market value. This is construed to mean the price at which the property would change hands in an arm’s length transaction between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. The valuation issue may arise in the context of inclusion of property in the estate or in computing a deduction or exemption.
Business freeze: A controlling shareholder recapitalizes (tax free) the stock interests into common and preferred shares and gives the common stock to the children when it has little value but significant appreciation potential. The same procedure can to used for a partnership or an LLC. The value of the gift is the value of what is given away. If the parent retains some common stock, the value of the gift is both the value of the preferred and the common stock retained. The appreciation in the value of the common stock gifted to children escapes tax. If the gifting parent dies still holding the retained interest (usually the preferred stock), it can be subject to taxation both as a gift and as part of the estate requiring adjustments to prevent a double taxation result.
To make sure that you are protected, it is crucial that you contact skilled and experienced Attorney C. Stephen Gurdin Jr. a Pennsylvania Estate Planning lawyer.
Call Attorney C. Stephen Gurdin Jr. at his Gurdin Law Wilkes-Barre Scranton Pennsylvania area office today, 570.826.0481 toll free 1.800.221.0618.email Stephen@gurdinlaw.com to schedule a free consultation
Regular Office hours 2:30 and 7 p.m. Monday through Friday by appointment. Earlier appointments available upon request.