Shareholders in closely-held corporations have won an important estate tax battle with the Internal Revenue Service.
The issue is how to place a value on a corporation that has a lot of “built-in” capital gains-meaning that if the company’s assets were liquidated, it would owe a hefty capital gains tax.
In this case, a man named Frazier Jelke owned about 6 percent interest in an investment company. The company had $188 million worth of assets. However, if it sold those assets tomorrow, it would owe $51 million in capital gains tax. [Read more…]