How defined-value gifts can help limit your tax exposure

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Abstract: Making large gifts can be a challenge if they consist of illiquid, difficult-to-value assets, such as interests in a business or family limited partnership (FLP). They must be supported by a business valuation, and there’s a risk that the IRS will claim, years later, that a gift was undervalued for tax purposes. But a “defined-value gift” protects against unexpected taxes down the road. This article looks at how a defined-value clause works and how it can withstand an IRS challenge.