By Nick Goldstein, vice president of regulatory affairs & assistant general counsel, ARTBA
The U.S. Internal Revenue Service wants to change the way small, family-owned businesses are valued for estate planning purposes. According to Census Bureau data, 94 percent of highway, street, bridge and other heavy and civil engineering construction meet the Small Business Administration (SBA) annual threshold for classification as small businesses.
Under an IRS proposal, these small businesses would be restricted from discounting shareholder stock for estate tax purposes for interests including “lack of control” or “lack of marketability.” Discounting helps family estate planning because it allows business owners to transfer non-controlling shares of their enterprises to children or other relatives without fear of having to give up primary control of the overall enterprise.
In Nov. 2 comments to the IRS, ARTBA criticized the proposal as overly broad and also noted the agency did not clearly explain the problem the regulations were seeking to address. Further, ARTBA noted the IRS regulations are counter to current tax and estate planning laws meant to help transition ownership of family-owned businesses from generation to generation. ARTBA urged the agency to withdraw their proposal and make a better effort at explaining exactly what problem the agency is trying to resolve.
ARTBA also joined 16 other transportation construction industry associations in separate Nov. 2 comments to the IRS. Read the coalition comments.