Question

Rita Jennings owns various investments in stocks, bonds and rental properties. She wants to transfer the stocks to an FLP and take advantage of minority discounts. What advice might you give Rita to lessen the odds of having problems with IRS later?

Answer 1

Family limited partnerships had been a good way to avail the advantages of minority discount. To avail the benefit Rita has to keep in mind:

a) Make an agreeement for the formation of FLP as without that IRS would not recognize the FLP.

b) List of assets that were transferred should be properly documented.

c) Valuations of the assets like market value of stocks, etc shall be obtained by professional valuers.

d) the practitioner must be more diligent in setting up an FLP to ensure that it can withstand IRS examination.

These might lessen the problems at a later stage while claiming minority discounts.