IRS Rules That Failure To Disclose Valuation Method May Subject Gifts To Added Tax Beyond 3-Year Statute of Limitations

In filing a Gift Tax Return, a donor of closely held stock failed to disclose on the return the method used to value the stock or any description of the discounts taken in valuing the stock.  The IRS Office of Chief Counsel has ruled that this lack of disclosure indicates the gift tax can be assessed on the transfer at any time.  In order to comply properly, the transfer must be adequately disclosed by including a description of the property transferred; the identity of, and relationship between, the donor and donee; and a description of the method used to value the gift, including any discounts claimed. Points of Interest

• According to the National Bureau of Economic Research (NBER), the economy is now in recovery.

• It is best to begin estate planning early in the year so issues can be resolved throughout the year and the estate plan can have time to operate during the year.

• Proper planning and implementation of an exit, succession and tax strategy allows you to keep more of your hard earned cash and allows you to have a better retirement when the time comes.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors