Minority Discount

If you make a gift of an interest in your LLC, FLP or other entity to your child, the value of the gift must be determined to ascertain whether a gift tax would be due. The gift is generally valued at its fair market value (see above). However, this value may be reduced for a minority discount. This is based on the concept that no person would pay as much for a noncontrolling interest in an asset (such as an LLC) as they would for an interest that is controlling (generally speaking more than 50%).