Last week we discussed the Marketability Discount in valuing shares of stock in a family-held business. There is also a second discount that Courts have allowed which is the Minority Discount. The value of a stock is reduced if the interest given is a minority stake in the corporation. In other words, the interest given does not have enough shares to make decisions about how the corporation should be run. So as long as Mom always has the final word, then she can give you as much non-voting stock as she wants, just keeping that 1% interest that is the only voting interest. She could, give you 90% of the company in six years, using both discounts on valuing the interests gifted of the $100,000 company and the annual $10,000 exclusion, and still be 100% in charge. So the 90% interest would still be a minority interest. The same technique can be used in more complex scenario so that a company can be owned equally by Mom and Dad, but both of them be deemed to own a non-controlling interest, as each has a voting interest of only 50%, technically a minority. Please note that the valuation techniques discussed above are much more complex than this format allows to explain. These types of transactions are scrutinized very closely by the IRS. For this reason, any form of gift discounting should only be done in conjunction with an estate planning attorney, an accountant and a certified business appraiser.