Appeals Settlement Guidelines for Family Limited Partnerships and Limited Liability Companies

The Internal Revenue Service has issued appeals settlement guidelines for family limited partnerships and limited liability companies that address issues of valuation, gross estate inclusion, indirect gifts and penalties. Professor of Law Elaine Gagliardi notes that “[t]he guidelines acknowledge the historical use of such entities to assist in succession planning for active businesses, and imply that such use is legitimate.” On the topic of valuation, Professor Gagliardi writes that “the guidelines indicate ‘there should be minimal or no discounts from the pro rata value of the underlying asset value of the entity.’ The guidelines urge adoption of the Tax Court's ‘more sophisticated approach’ in recent cases.”