1. C

Individuals with a "minority interest" typically have no management power, lack voting rights and have no say in the sale or liquidation of the business.

2.
A

In a typical FLP setup, the owners (parents) retain the general partnership interests and the children/grandchildren receive the limited partnership interests. The limited partners may qualify for the minority and lack of marketability discounts.

3.
B

A Blockage discount is only available for publically traded corporations. Mr. Stewart would not qualify for the minority discount either since he owns a controlling interest in the business by owning 80% of the company.

4.
A

Jeff will receive a step-up in basis to $30,000 on the ABC stock, and he will not owe any taxes on the inheritance of the stock. These assets will add $430,000 to the gross estate of Mr. Jones and Jeff will not owe any federal income tax on the life insurance proceeds.

Introduction

Related Articles
  1. Managing Wealth

    Protect Your Personal Assets

    A family limited partnership (FLP) can go a long way toward securing your family's property.
  2. Taxes

    How a Step-up in Basis Reduces Capital Gains Tax

    How to use a step-up in basis to reduce the capital gains tax on inherited appreciated assets.
  3. Taxes

    4 Ways To Minimize Estate Taxes

    These four strategies will ensure that most of your money goes to your loved ones, and not to the government.
  4. Small Business

    What is a Partnership?

    A partnership is an organization where two or more owners operate a business.
  5. Retirement

    Protecting Loved Ones Financially After You’re Gone

    A trust fund doesn't imply you don't trust your beneficiaries, it allows you to protect them.
  6. Insights

    How the Case Against BofA's Ken Lewis Fizzled

    The regulatory cloud has lifted for Kenneth D. Lewis. Last week, the former head of Bank of America received a modest penalty, paid for by his former employer, and a temporary ban from an industry ...
  7. Small Business

    MLPs and Limited Partnerships: How They Differ

    Limited partnerships and master limited partnerships have one difference that makes all the difference.
  8. Investing

    Understanding Drag-Along Rights

    Drag-along rights enable a majority shareholder to force minority shareholders to consent to the sale of a company.
  9. Taxes

    Get Ready For The Estate Tax Phase-Out

    Changes to federal legislation will affect how your assets are treated once you're gone - be prepared.
  10. Small Business

    Which Type of Organization Is Best For Your Business?

    Learn the differences between the types of business organizations so you can determine how to best structure your business for tax and liability limitations.
Frequently Asked Questions
  1. What's considered to be a good debt-to-income (DTI) ratio?

    Your debt-to-income ratio helps lenders determine your credit worthiness. Find out how to calculate your score and how to ...
  2. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ...
  3. What does a Chief Financial Officer (CFO) do?

    A CFO is responsible for accurate reporting of a company's financial information, investing the company's money and identifying ...
  4. How did George Soros break the Bank of England?

    George Soros pocketed $1 billion by betting against the British pound, cementing his reputation as the premier currency speculator ...
Trading Center