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Death is something that nobody can avoid. Also, as the saying goes, taxes are just as inevitable as death in Florida or in any other state. On the other hand, there are some things that a person can do to minimize exposure to the estate tax. However, estate tax planning can take on a flavor of its own when it comes to business owners.
In many ways, estate tax planning for businesses is similar to that for individuals. Usually the goal is to avoid as much tax liability as possible, which means shielding assets from being considered non-exempt assets. Part of this strategy may include taking steps to avoid having assets valued past the allowed estate tax exemption amount. This means that methods for valuation of assets is important.
One way that business owners can use valuation to help minimize estate tax liabilities is to elect a special valuation method allowed under U.S. tax laws. The special valuation is available to small business estates that own real estate property that had been used for business purposes. The tax benefit for small business estates is known as the “special use valuation” benefit. This allows the real estate property to be assessed at productive value rather than its fair market value.
This usually allows the real estate property to be valued at a significantly lower assessment, which can minimize estate tax liabilities in Florida and any other state. However, there are various other qualifications that must be met in order to obtain the special use valuation. One requirement is that the real estate property must continue to be used in business operations in a family-run company. Having the most up-to-date information regarding any possible changes to these regulations will also be essential.