An attorney says proposed regulation changes from the Internal Revenue Service could change estate planning for some farming operations.
Kristine Tidgren, assistant director of Iowa State University’s Center for Agriculture Law, says if adopted, the rule would impact families owning a controlling interest in a privately held corporation, partnership, or limited liability corporation that exceeds the $5.43 million estate tax exemption.
“It would only impact taxpayers who had some sort of an entity they had established to be able to transfer their assets to the next generation. They’re family businesses and family companies, but they’re high asset family companies.” says Tidgren.
The IRS says the proposed changes are to prevent taxpayers from giving insignificant interests to non-family members to escape being subject to the rules. Tidgren tells Brownfield if the proposed rules are implemented, they are likely to be challenged.
“There are people who are concerned the IRS has exceeded its authority in issuing these proposed regulations so if they became final they would not be valid. It remains to be seen if that type of challenge would be successful or not.” says Tidgren.
The proposed regulations are currently open to public comment – they close on Nov. 2.
Source: brownfieldagnews.com