News & Events


Last summer, proposed changes to Section 2704 of the Internal Revenue Code appeared to be tightly constraining the benefits of certain transfers of family-controlled business assets by eviscerating discounts that might be available to such transfers. The proposed changes caused a visceral reaction within much of the accounting, financial planning and legal industries as it started a clock on implementing those strategies before a potential change.

Fast forward five months. With the Trump administration not indicating if it would support or oppose the changes, much of the uncertainty remains. However, on Jan. 10, Kathy Hughes of the Treasury Department Office of Tax Policy spoke at the 51st Annual Heckerling Institute on Estate Planning about the anticipated changes that might be implemented. First, she indicated that work on revising the proposed regulations continues in light of public comments and that those changes will not be finalized before the Trump administration takes office. However, more interestingly, she indicated that a three-year look-back rule would not be retroactive to before the effective date of the regulations, whenever that may be. This rule will require that any transfer to survive the transferor's life by three years in order for certain discounts to apply.

In light of the exclusion from look-back review, those business owners seeking to take advantage of certain transfer and estate planning tools would be well served by reviewing their options now, before the new regulations are finalized. For planning assistance, contact your local UHY LLP professional, or visit us on the web.