Sponsored By
Trusts & Estates logo

Justifying FLPsJustifying FLPs

Since the early 1990s, use of the investment family limited partnership (FLP)1 as a sophisticated estate-tax reduction technique has grown. Almost universally, the Internal Revenue Service asserts in these situations that a valuation discount should not be permitted because the investment FLP has no real investment purpose and therefore no economic substance apart from estate-tax savings. The IRS

23 Min Read
Wealth Management logo in a gray background | Wealth Management

Louis S. Harrison, partner, Harrison & Held, Chicago, and John M. Janiga, professor, School of Bu

Since the early 1990s, use of the investment family limited partnership (FLP)1 as a sophisticated estate-tax reduction technique has grown. Almost universally, the Internal Revenue Service asserts in these situations that a valuation discount should not be permitted because the investment FLP has no real investment purpose and therefore no economic substance apart from estate-tax savings. The IRS employs this argument to pave the way for courts to be more liberal in their statutory applications to invalidate the FLP. As more cases have entered the Tax Court queue with fact patterns that have what the IRS and the Tax Court view as questionable...

Unlock All Access Premium Subscription

Get Trusts & Estates articles, digital editions, and an optional print subscription. Choose your subscription now and dive into expert insights today!

Already Subscribed?

About the Authors

Louis S. Harrison

Partner, Harrison LLP

A frequent speaker and writer on tax and estate planning, Louis S. Harrison has spoken before numerous groups nationwide. He has authored more than 100 published articles on a broad range of tax and estate-planning subjects in legal, accounting, tax and estate journals and periodicals, and is co-author of the books, "Sorting Out Life's Complexities: What You Really Need to Know About Taxes, Wills, Trusts, Powers of Attorneys and Health Care Decisions" and "Illinois Estate Planning Forms and Commentary."

Louis S. Harrison is the Illinois State Chair of the American College of Trusts and Estate Counsel and has been an adjunct professor at Northwestern University School of Law, DePaul University College of Law and Chicago-Kent College of Law.

As a member of the Chicago Bar Association, Lou has chaired the Estate and Gift Tax Committee and served on the Trust Law Committee and Probate Practice Committee.

Before joining Harrison & Held, LLP, Lou was the partner in charge of the Lord, Bissell & Brook Wealth Preservation Group.