DID YOU KNOW?

Under Section 6662 of the Internal Revenue Code, undervaluation penalties of up to 40% may be assessed on the value of an asset (which includes owner stock or partnership interest) reported for tax purposes, including gift, estate and generation-skipping transfer tax. The penalty is applied to the difference between the taxpayer’s reported value and the IRS’ assessment of the asset’s value.

Defending the value gifted or contributed can be more costly than the cost of a business valuation!