Gifting Company Shares Eased by Tax Court Ruling on Valuations

Owners of S corporations now have an easier time transferring more shares tax-free after a momentous US Tax Court decision last year flipped a longtime IRS position.

The Tax Court supported an appraisal method that tends to lower the valuation of an S corp, sometimes by as much as tens of millions of dollars. The IRS and Tax Court previously opposed the method.

With that lower company valuation, a business owner can give more shares using the gift and estate tax exemption. In 2024, the exemption allows for $13.6 million in lifetime tax-free transfers. Valuation disputes are often the subject ...