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Scenario: Alan establishes a Family Limited Partnership (FLP), transferring $12,000,000 in real estate for a...

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Accounting

Scenario: Alan establishes a Family Limited Partnership (FLP), transferring $12,000,000 in real estate for a 1% general partnership interest, while his children receive 1% each as limited partners. Alan gifts 30% limited partnership interest to each child.
What is the risk associated with the IRS challenging the valuation discount?
The IRS will always accept the discount as long as it is well-documented and they will not use their own business valuators to assess the business value.
The FLP will be dissolved.
The IRS might disallow the discount if it is excessive and lacks a legitimate business purpose.
There are no risks associated with discounts
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