The IRS has indicated they are drafting proposed regulations to restrict the usage of minority discounts and marketability discounts on transfers of closely held company stock or family partnership interests to family members. There has not been a timetable given on when these proposed regulations are to be issued, but sources indicate that it could be as early as late summer or early fall.

What the limitations will include is unknown at this point, but by looking back at President Obama's budget proposals in prior years, it could give us a clue as to what the IRS might be thinking. In his prior proposals, there were discussions about eliminating the ability to utilize the lack of marketability and minority interest discounts when it involves transfers between family members.

With most valuations of closely held companies, there is a discount used for what a willing buyer would pay for a minority interest in the company when they can't influence control over the entity. There is also a discount used for the lack of marketability because in most closely held companies the recipient isn't able to take their new ownership and sell it in the open market. The combination of these two discounts can range anywhere from 20-40 percent depending on the circumstances.

If you are thinking about transferring some of your interest in a closely held company, you may want to act now. Contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 354 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.  

 

Save the date! More UHY events are just around the corner...

8/25 UHY LLP Sales and Use Tax Issues of Internet Transactions 

9/15 UHY LLP Annual Not-For-Profit Update

10/22 UHY LLP Manufacturing Outlook "Built To Compete: Embracing Risk For a Sustainable Future"

11/12 UHY LLP Construction Outlook 2016

12/2 UHY LLP Annual Accounting and Regulatory Update
 

UHY LLP Potential Recruits Work with DPS Students to Sharpen Reading and Writing Skills

On Thursday, June 4, UHY LLP's Michigan practice invited a group of students from Thirkell Elementary in Detroit to their Farmington Hills office to help them develop stories for the Beyond Basics Publishing Center. UHY teamed up with Beyond Basics, a local 501c(3) nonprofit organization working to improve literacy and raise reading proficiency in inner city schools, to host students to help improve reading comprehension and expand the students' vocabularies.

Nearly 20 college recruits and other UHY employees gathered at UHY's training facility to help students from Mrs. Jackson's third grade class write their own personal stories. Each volunteer was assigned a student to mentor for the day. The recruits started by getting to know the students. With this information, the students created a short story that was designed to enhance vocabulary and sharpen writing skills. After the stories were written, each student was able to pick a book of their choice and read to their "buddy" or mentor.

As a result, 16 new stories were created for the Beyond Basics Publishing Center. This community event was part of UHY's Connect program. The program allows college recruits to get to know more about the organization, work with UHY employees, and experience some of the corporate social responsibility initiatives UHY takes part in. Both the students and UHY recruits benefited greatly from the experience.

"We have been working with Beyond Basics for the past four years, pairing our interns and college recruits with students from Detroit Public Schools. The objective of this program is to not only help strengthen the reading and writing skills of elementary school students but to also give our interns and recruits an understanding of UHY's commitment to giving back to the community and experiencing a volunteer outing first hand," said Rina Henning, UHY LLP recruiting manager.

UHY LLP places great emphasis on being active within the community from each recruits' first connection with the firm because corporate social responsibility is a high priority at all levels within the company. The firm also has its own independent 501c(3) organization, UHY Cares. Cares, which was incorporated over five years ago, was an idea inspired by employees and is volunteer based. Through UHY Cares, employees are able to give back to the community, including helping individuals going through personal emergencies or hardships. UHY Cares Michigan has provided assistance to over 150 local charities and families and continues to grow this list every year.

Beyond basics has been active in the Detroit community since 1999.Their mission is to guide and support children in economic need to develop fundamental educational skills. They aim to move these children beyond the basics and prepare them for productive and meaningful lives. The work the organization does, shaping the minds of grade school children, is especially important because nearly 50% of adults in Detroit are considered functionally illiterate.
 

As reported in Crain's Detroit Business in late March, UHY Advisors' Corporate Finance team presented private equity firm O2 Investment Partners LLC with the potential acquisition of a technology client, PC Treasures, Inc. At first Jay Hansen, managing partner of O2, had a hard time grasping PC's business. PC Treasures is a multi-channel distributor of licensed multimedia bundles and cutting-edge computer, tablet and smartphone accessories, and other specialty products. It took a while for Hansen and his staff to understand PC's niche, causing the deal to take longer, but the light finally went on.

Due diligence taught Hansen and Todd Fink, another O2 managing partner, that there was a profit to be made in bundling. They also learned that they were compatible with the co-founders of PC Treasures. The deal was especially complex because PC has a unique business model. They were launching a new major product and it was the middle of their busiest season. It was also imperative that the "family" culture remained intact to maintain great customer relationships built on mutual trust and quickly capitalize on new market opportunities.

The unique nature of the transaction forced the advisors on the deal to come up with creative solutions that would meet the needs of all parties. Despite the complications, the deal went smoothly and PC's co-founders Brian Austin and Les Thomas agreed to invest some of the proceeds from the sale back into the company.

The deal closed in November 2014, PC Treasures busiest season, and was awarded "Deal of the Year: Best Deal under $100 Million" by Crain's Detroit Business. UHY's team played a crucial role in facilitating the transaction. Operating under Steve McCarty; Aaron Witalec, Bob Kendall and Alex Conti acted as sell side advisors on the deal.

 

Are you ready to take charge of your career path? Be sure to visit our careers page for the most up to date career listings or contact Yolanda Rountree at yrountree@uhy-us.com or 586 843 2642. Check out some of the current opportunities in our Michigan offices:

 

• Audit Manager, 7+ years of experience, manufacturing experience is highly preferred
• Audit Manager, 7+ years of experience, SEC experience is highly preferred
• Audit Accountant, 2-10 years of experience working with municipalities
• Audit Senior Staff Accountant, 2-4 years of experience
• Internal Audit Risk & Compliance Manager, 7+ years of experience
• R&D Tax Specialist, 7+ years of experience
• Tax Manager, 7-10 years of experience, marketing experience is required
• Tax Senior Consultant, 4-5 years of experience, Big 4 experience is required
• Tax Senior Accountant, 5-7 years of experience, CPA required
• Director of Litigation, testifying experience required municipalities
• Senior Associate (Corporate Finance), 2-4 years of Big 4 experience highly preferred

 

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