The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, permanently set the federal estate, gift, and generation-skipping transfer (GST) tax exemption at $15 million per individual ($30 million per married couple), effective January 1, 2026, and indexed for inflation thereafter. The top rate remains 40%, and the annual gift tax exclusion is $19,000 per donee for 2026.

With the scheduled sunset of the 2017 exemption no longer a concern, many clients have asked whether valuation still matters. It does, for different reasons than before.

Estates near or above the threshold. For owners of closely held businesses, a single operating company or real estate portfolio can consume most of the exemption. Lifetime transfers of minority interests, supported by well-documented discounts for lack of control and marketability, remain the primary way to move future appreciation out of the taxable estate.

Adequate disclosure. A gift reported with an appraisal that satisfies the adequate disclosure requirements of Treas. Reg. §301.6501(c)-1(f) starts the three-year statute of limitations. Without adequate disclosure, the IRS can challenge the value of a gift years later, including after the donor’s death.

Income tax basis. For estates below the exemption, the objective often shifts from minimizing value to supporting it. Assets included in a decedent’s estate generally receive a basis equal to fair market value at death under IRC §1014, so a well-supported date-of-death value can reduce capital gains tax for heirs on a later sale.

State estate taxes. Twelve states and the District of Columbia impose their own estate taxes, many with exemptions well below the federal level. California has no estate or inheritance tax, but California residents who own property in other states may still be exposed.

Implementation still matters. In Estate of Fields, the Tax Court included the assets of a family limited partnership in the decedent’s estate under IRC §2036(a). That eliminated the claimed discounts, and the court sustained an accuracy-related penalty; the Fifth Circuit affirmed in 2026. Valuation discounts are only as durable as the structure and facts behind them.

Capto Advisors prepares gift and estate tax valuations in accordance with Revenue Ruling 59-60 and USPAP. Contact us to discuss your planning objectives.