The BIG Unknown

One of the questions that practitioners ponder is how to properly discount the value of stock in a closely held C corporation to reflect the future income tax liability on the corporation's unrealized built-in gains (BIGs). For transfer-tax purposes, this is known as the built-in gain discount (the BIG discount). The proper computation of the BIG discount has perplexed courts and practitioners alike.

One of the questions that practitioners ponder is how to properly discount the value of stock in a closely held C corporation to reflect the future income tax liability on the corporation's unrealized built-in gains (BIGs). For transfer-tax purposes, this is known as the built-in gain discount (the “BIG discount”).

The proper computation of the BIG discount has perplexed courts and practitioners alike. Many had hoped that the Supreme Court would solve the mystery. But, on Oct. 6, 2008

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