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Oct 1, 2010 12:00 PM
Valuation Discounts in Tiered Investments
Does the additional layer add new risks to the market value analysis?
The subject of tiered discounts is a controversial one. Taxpayers may view the application of a tiered discount as a means to achieve a better tax result. Those who are already critical of valuation discounts see the additional layer of discounts as a blatant tax device. In reality, there are times when such discounts are warranted and can be verified by similar constructs existing in the marketplace. There are other times when such discounts are, indeed, excessive and unjustifiable.
If merely adding a tier or layer to a business organization was the only justification for discounts, then sharp estate planners could quickly dissipate any potential transfer tax liability by simply adding a layer or two to their planning. “Disappearing Value,” this page, illustrates the disappearance of value assuming a combined 40 percent discount at each tier.
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| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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