The Formation, Transfer And Valuation of FLP Ownership Interests

Reilly, Robert F.; Schweihs, Robert P.
December 1998
Journal of Financial Planning;Dec1998, Vol. 11 Issue 6, p62
Academic Journal
This article focuses on the formation, transfer and valuation of family limited partnership (FLP) ownership interests, considered to be a commonly used instrument in family estate tax planning. The formation of an FLP and the gifting of FLP ownership interests can be an important component of the estate plan of closely held business owners. However, family-owned business owners and their valuation and taxation advisors should recognize that the rules are ambiguous for determining whether the U.S. Internal Revenue Service (IRS) will recognize the FLP formation or whether it will recognize the transfer of the FLP ownership interest as a gift. Paying close attention to the requirements of the IRS is essential in order to realize the business owner's objective of minimizing the estate tax burden on the intergenerational transfer of the family's wealth.


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