August 2009

A Win for Taxpayers
 

A few days ago the U.S. Tax Court issued a ruling that allows single-member limited liability companies to have standing under gift tax rules.  Setting aside the contention that single member LLCs are “disregarded entities” the court ruled that with regard to the determination of estate and gift taxes, such entities may be used to secure valuation discounts which can lower or eliminate all related taxes. 

 

While the court has yet to decide on other aspects of the case involving whether the “step doctrine” applies and whether the amount of the discount was appropriate, the recent ruling may, nevertheless, have far-reaching effects. 

 

Planning opportunities are significant.  However, the opportunities may be short lived.  With anticipated legislation to prevent the estate tax from going to zero in 2010, Congress may enact legislation to address disregarded entities and related valuation discounts.

 

If you would like to learn more please feel free to call Vincent Ruocco, LLC, CPA 203.932.2931.

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