If the statements of government personnel pan out, we should shortly see the IRC Section 2704 proposed regulations that may impose further restrictions on valuation discounts for transfers of interests in limited partnerships and LLCs. Treasury officials back in May said that the proposed regs would be the first in a series of gift, estate, and trust projects to be released over the “next four to eight weeks,” according to Tax Notes Today (subscription required). Among the uncertainties include the effective date of the new rules (retroactive to date of release or when finalized?), whether or not valuation discounts will be completely eliminated, and what specific entities will be affected. Stay tuned!

Extra: Meanwhile, the IRS keeps scrutinizing FLPs, as the recent estate tax case of Holliday v. Commissioner, T.C. Memo 2016-51, makes clear. There, the court found there was no legitimate and significant reason for creating the FLP. The court went on to say: “Because we have held that the value of the assets is includible in the value of the gross estate, there is no need to consider or decide the amount of any discount attributable to the limited partnership interest.” Consequently, taxpayers who want to benefit from discounts must make sure to set up the FLP correctly.