Limited Liability Company
A popular estate planning tool used today is the limited liability company (LLC) investment-holding entity. Not only does the incorporation structure of an LLC provide for asset protection from creditor claims, it also may offer the advantage of valuation discounts associated with transferring fractional interests by gift or by sale.
Fractional Ownership and Discounts
Whether the partial ownership interest in question is a member interest or another form of equity ownership in the LLC, the valuation of fractional ownership usually allows for the application of a discount for lack of control (minority interest) and a discount for lack of marketability. The discounts applied are dependent upon the facts and circumstances unique to every LLC. Such discounts are derived from market evidence, are guided by appropriate revenue rulings and legal precedence, and are applied based on our extensive experience in this area as part of our preparation of a defensible appraisal. The resulting value conclusion can be helpful in minimizing the tax impact connected with the transfer of the subject ownership interest.
Why Choose Convergent Capital Appraisers?
The professionals at Convergent Capital Appraisers possess in-depth knowledge of the applicable IRS code sections, rulings (including Revenue Ruling 59-60) and court decisions regarding appraisals of all types of closely-held business equities. We are also accustomed to working with business owners and management, attorneys, CPAs and other estate planning professionals throughout the valuation process.
We would be glad to discuss your particular situation with you, and work with your advisory group to help you achieve your estate planning objectives. Contact us today.