Overview:In August of this year, the IRS issued proposed regulations that will eliminate (or severely limit) the ability to discount the value of transfer of interest in closely held entities (Family Limited Partnerships (FLP), Limited Liability Corporations (LLCs), family corporations) to family members. If enacted in their current form, would result in family business owners paying much higher gift and estate taxes when transferring ownership of their business to their heirs.For estate planning purposes, the IRS currently allows a person to gift minority interest in one’s family owned business (FLPs and LLCs) to one’s heir(s) at a discounted rate. The IRS permits the discounted rate because these interests are not marketable, ie. they are not attractive to anyone outside the family and therefore are worth less than their fair market value. In addition, these interest are usually minority or non-voting interest, which is a second reason for a discount in value. The tax code is ambiguous as to the discount rate. The new regulation is intended to eliminate the ambiguity by adding restrictions on discounts for closely held interests.The proposed regulation will undergo a ninety day comment period and a public hearing on December 1, 2016. Following the hearing the IRS will deliberate the comments and results of the hearing and publish final regulations. The new regulations will take effect within thirty days after publication release.The regulation not projected to become official until early 2017. Any business owner who is interested in making intra-family gifts for the purpose of reducing the estate taxes they may have to pay in the future, should consider forming an FLP and complete gifts before the regulations become final.This update is provided to NGCOA members as information only. Members should consult their financial advisor in making investment decisions and understanding how state laws may apply to your estate tax exemptions.