When a loved one dies, paying Uncle Sam is the last thing anyone wants to consider. If the decedent’s net worth is tied up in a family business, paying the estate tax due on the business’s fair market value within nine months can be daunting and stressful.
The IRS has recognized that closely held business owners usually have most of their cash tied up in the assets of a family business. When an owner dies, the estate has a hard time paying the related estate taxes. Suppose at least 35% of a decedent’s adjusted gross estate is attributed to a closely held business. In that case, the estate has the additional options of either selling the business interest at a favorable tax rate or deferring the estate tax due on the business interest by paying the tax in installment payments. For more information on estate planning or taxes, please call LSL CPAs at 714.569.1000.
By Suzanne Lieber
