FORUM Private Client Group

11313 USA Parkway
Fishers, IN 46037

Loss of a Spouse


Types of Post-Mortem Elections for Business Owners

Business owners have these techniques available to them, in addition to other available post-mortem elections.

Transfer-tax-related elections

Special use valuation

The special use valuation election values real property (e.g., real estate) used for farming, or in a closely held or family-owned business, based on its actual use rather than its highest and best use (i.e., fair market value).

Deferring payment of estate taxes

This election postpones the payment of estate taxes due on a closely held business owner's estate. Only payments of interest are made for 4 years, and then payments of interest and principal are made over a period of up to 10 years.

Valuation discounts for interest in closely held businesses

If the decedent was an owner of a closely held business interest at the time of death, the estate's personal representative may elect to use certain valuation discounts (e.g., minority interest discount, lack of marketability discount) if the business interest qualifies.

Income-tax-related elections

Section 303 stock redemption

If the decedent owned stock in a C corporation at the time of death, a Section 303 stock redemption election treats certain redemptions as capital transactions instead of as dividends (as they would normally be treated) as long as the redemptions are used to pay estate taxes, funeral expenses, or certain administrative expenses.

Partnership asset basis election

This election can be made after the death of one business partner to step up the income tax basis of the deceased partner's share of the partnership assets from adjusted basis value to fair market value (or estate tax value).

IMPORTANT DISCLOSURES Broadridge Investor Communications, Solutions, Inc. and FORUM Private Client Group are separate and unaffiliated entities. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.