ABA Comments on IRS Rule Limiting Valuation Discounts

The American Bankers Association today commented on a proposal by the IRS that would limit valuation discounts of family interests in certain family entities for estate, gift and generation-skipping transfer tax purposes. ABA argued that the IRS does not need to distinguish, as the proposal does, between loans extended by “publicly held” banks and other institutions due to bank regulations that govern activities with related parties.

“The IRS’s concern about potential conflicts of interest in loan terms has been mitigated by these important regulations,” ABA said, adding that “it would be inherently unfair to families, otherwise unrelated to the bank, to be penalized under these valuation rules simply because they seek financial and fiduciary services with a bank that is not ‘publicly held.’” For more information, contact ABA’s Phoebe Papageorgiou.