O'Reilly logo

Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests + Website, 2nd Edition by Robert T. Slee

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 30

Family Transfers

Transferring a business to the succeeding generation is the realization of an American dream. Although it is likely that only 10% to 20% of private businesses actually transfer from one generation to the next, thousands of transfers are accomplished in the United States each year. There are numerous methods used to facilitate transfers to family. Family transfers, more than any other type, require a long-term perspective on the part of the transferors, usually the parents, and the transferees, typically the children. This lengthy time span has several explanations. The mechanics of several methods require several years to implement. Further, parents may not wish to relinquish control of the company immediately, so they may wait until some point in the future or may transfer control incrementally.

In late 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (H.R. 4853), which created new rates and exemption amounts for estate, gift, and generation-skipping taxes. This new multibillion-dollar tax cut will greatly impact the transfer of private business interests. Some of the highlights of the new law, which applies only to years 2011 and 2012, are:

  • $5 million exemption per person ($10 million for married couple) for estate, gift, and generation-skipping taxes (indexed for inflation in 2012).
  • 35% top tax rate on transfers over the exemption limits.
  • Federal capital gains and dividend rates remain at ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required