Abstract

http://ssrn.com/abstract=1262405
 
 

Footnotes (171)



 


 



Family Limited Partnerships: The Beat Goes On


Walter D. Schwidetzky


University of Baltimore - School of Law

2007

Tax Lawyer, Vol. 60, p. 277, 2007

Abstract:     
It is increasingly common for the older generation to form family limited liability entities (FLLEs), which are usually either limited partnerships or limited liability companies. The older generation then gifts the FLLE interests to the younger generation and/or leaves them to the younger generation as part of its estate. For estate or gift tax purposes, substantial valuation discounts are taken off what would be the proportional value of the underlying assets. These valuation discounts are commonly taken because the relevant FLLE interests lack control and are usually not as readily marketable as the underlying assets would have been. Discounts of 35% or greater are not unusual.

If unqualifiedly allowed, this technique would be an estate tax bonanza. With a bit of slight of hand, the value of an estate could be dramatically reduced with perhaps little change in the underlying beneficial ownership or use of the assets. Tax advisors and their clients love it. The Service does not. The Tax Court has taken a tough line, usually applying I.R.C. - 2036 to ignore the FLLE and include the assets contributed to the FLLE in the decedent's estate. The 3rd and 5th Circuits (and to a much lesser extent the 1st Circuit) have had something to say on the subject as well. They have not been particularly taxpayer-friendly either. The article discusses and analyzes the relevant case law and makes recommendations for reform.

Number of Pages in PDF File: 65

Keywords: family limitied liability entities, FLLEs, limited partnerships, limited liability companies, estate taxes, gift taxes, Internal Revenue Code, taxation

JEL Classification: H20, H29, K34

Accepted Paper Series


Download This Paper

Date posted: September 3, 2008 ; Last revised: January 27, 2009

Suggested Citation

Schwidetzky, Walter D., Family Limited Partnerships: The Beat Goes On (2007). Tax Lawyer, Vol. 60, p. 277, 2007. Available at SSRN: http://ssrn.com/abstract=1262405

Contact Information

Walter D. Schwidetzky (Contact Author)
University of Baltimore - School of Law ( email )
1420 N. Charles Street
Baltimore, MD 21218
United States
(410) 837-4410 (Phone)
(410) 837-4492 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 996
Downloads: 168
Download Rank: 103,244
Footnotes:  171
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.204 seconds