ERP | Valuation Discounts under IRC Section 2704

Take Action on the Proposed Regulations Now

Martin M. Shenkman, JD, CPA/PFS, AEP

There has been a deluge of articles analyzing the proposed Treasury Regulations under Internal Revenue Code (IRC) section 2704, which, if finalized in anything like their proposed form, will greatly reduce or eliminate valuation discounts. Valuation discounts, which have been the key to many estate plans, can reduce values sufficiently to permit moderately wealthy clients to use outright gifts to irrevocable trusts to accomplish their estate planning goals, thereby greatly simplifying planning. Wealthier clients who require grantor retained annuity trusts (GRATs), note sales, and a range of other techniques to leverage their exemption amount have depended on valuation discounts to make the cash flow from an entity or real estate property meet annuity or note payment requirements.