Tax Compliance

Gifts and Transfers of Closely Held Securities

The U.S. Congress has passed legislation which allows for annual gifts and transfers up to a certain dollar value (the annual exclusion) above which gift taxes must be paid by the donor. Congress also has regulated the amount of lifetime gifts (the unified credit), which limits the total transfers that a donor may make that are free of gift tax. Transfers beyond this limit are subject to gift tax at the applicable rate. Each of the annual exclusion and the unified credit is of course subject to change by Congress.

When interests in privately held businesses or their securities are transferred via gift, a business valuation is required to determine the fair market value of the gift. Gifts to qualified charitable organizations are not subject to these aforementioned limitations, however any deduction for a charitable gift of an interest in a privately held company must be supported on the donor’s income tax return by an appraisal (per IRS Form 8283).

What to Expect

As part of estate planning efforts for their clients, tax attorneys and accountants have retained Baker-Meekins to determine the fair market value of closely held businesses and their securities for over 20 years. Whether it is for a closely held business interest or an investment company holding: marketable securities; real estate interests; private equity investments; life insurance, etc., our valuations have been used with good result. We have substantial experience in working with leading legal and tax advisers using advanced planning techniques.

Timing

For gifts of closely held securities to family members or trusts, the client’s tax advisor will direct the timing for the delivery of the valuation.