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Family Partnerships and LLCs: Valuation Discounts, IRS Challenges, and IRC Section 2036

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, November 4, 2020

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers who work with high net worth individuals a comprehensive look at family limited partnerships and family limited liability companies. The speakers will discuss the current landscape involving valuation discounts for estate and gift tax purposes and detail the specific issues surrounding recent cases. The webinar will also address the interplay between estate planners and income tax advisers, in particular with respect to planning to obtain a step-up in basis upon death.


The Service continues to challenge the ability of taxpayers to claim valuation discounts for both lack of control and marketability in family-controlled entities. Control in this context generally means at least 50 percent ownership of a corporation, partnership, or limited liability company taking into account certain complex family attribution rules.

Court rulings have required estate tax inclusion of transferred assets, Estate of Powell v. Commissioner and Estate of Cahill v. Commissioner by way of Section 2036(a)(2), which requires the inclusion of property when a decedent retains certain rights in the property transferred. Recently, in a taxpayer victory, the Tax Court upheld a 35 percent valuation discount in Grieve v. Commissioner.

Trust and estate professionals need to understand the caveats and considerations of structuring and maintaining these partnerships to advise clients accurately to stand up to continuing IRS scrutiny.

Listen as our panel consisting of Renee Gabbard, Esq., one of the nation’s leading estate planners and Carsten Hoffmann, ASA, one of the nation’s leading valuation experts, offers practical guidance on family-controlled entities claiming valuation discounts.



  1. Background: family partnerships and family limited liability companies
  2. Valuation discounts: it’s not just lack of control and lack of marketability
  3. Recent IRS challenges: what are the cases you need to know about
  4. Proper structuring and execution: how to avoid the pitfalls of Section 2036
  5. Interplay with income tax, estate tax, and basis step-up


The panel will discuss these and other important issues:

  • How does IRC Section 2036 impact FLPs, FLLCs, and other family-controlled entities?
  • Which high net worth individuals are the best candidates for these entities?
  • What lessons have been learned from recent IRS challenges to family-controlled entities?


Gabbard, Renee
Renee Gabbard

Bryan Cave Leighton Paisner

Ms. Gabbard’s practice focuses on privately held businesses, high net worth clients, and charitable...  |  Read More

Hoffmann, Carsten
Carsten Hoffmann

Managing Director, Trust & Estate Valuation Practice Co-Leader
Stout Risius Ross

Mr. Hoffmann has more than two decades of valuation expertise and is a recognized expert on a broad range of complex...  |  Read More

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