Closely-Held Corporations Interests and Tax Considerations

Summary

This practice note covers planning for the owner of a closely-held corporation. It begins with a discussion of how to provide a market for closely-held corporation stock in order to solve potential estate liquidity problems. Next is explored buy-sell agreements, the estate tax objective of buy-sell agreements, and how to determine stock price in a buy-sell agreement. The practice note then examines the two types of buy-sell agreements—cross-purchase agreements and redemption agreements. Finally, the valuation of closely-held corporation stock when there is no buy-sell agreement in play and deferral of estate tax under I.R.C. Section 6166 is explored.