Tax Court Addresses Lack of Control and Marketability Discounts in Family LLCs

Tax Court Addresses Lack of Control and Marketability Discounts in Family LLCs

      In a recent decision from the United States Tax Court, there were reviewed the valuations of certain gifts in a pair of family LLCs. Grieve v. Commissioner of Internal Revenue, T.C. Memo. 2020-28 (March 2, 2022). 

      While the court’s review of the facts and the competing valuations are quite detailed, and should obviously be reviewed by anybody practicing in the area, the most interesting takeaways from the opinion are the discounts that were ultimately afforded. With respect to the lack of control discount, both 13.4% and 12.7% were approved, respectively, for each of the LLCs. In addition, each LLC was afforded a lack of marketability discount of 25%.