No “All Going to Charity” Exception for Chenoweth/Ahmanson Funding Issue
Taxpayers and planners love to use valuation reductions for partial interests in entities as a method for reducing transfer taxes. Such reductions and discounts can be a two-edged sword, however.
The Ahmanson and Chenoweth cases point out that when a majority interest in an entity is included in a taxpayer’s gross estate, the valuation discounts will typically be substantially less than will apply to a noncontrolling or minority interest, and that this can have undesirable consequences when a portion of the entity is transferred to a charity or a marital deduction trust. For example, assume that a 100% interest owned by a decedent as his sole asset in an operating corporation is valued at $10 million, with little or no discounts taken.
Then assume that 60% of the . . .