WASHINGTON, D.C. (June 6, 2024) – The National Federation of Independent Business (NFIB) expressed disappointment in the U.S. Supreme Court's ruling in Thomas Connelly v. United States of America. The Court upheld the decision of the Court of Appeals, which complicates the transfer of closely held businesses following the death of a small business owner. NFIB had filed an amicus brief in the case with the U.S. Chamber Litigation Center, emphasizing the importance of redemption agreements for Main Street businesses.
“This decision enables the IRS to continue taxing small businesses based on an artificial and inflated assessment of the company’s worth following the death of an owner,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “As the IRS continues shifting their position to maximize tax liability, small businesses are left unsure on how to best prepare for the inevitable. Long-term succession plans can be the difference between a small business passing to the next generation or closing its doors for good. This ruling only intensifies the challenges small business owners and their families face.”
The case questioned whether life insurance policy proceeds taken out by a closely held company on a shareholder should be considered an asset when calculating federal estate tax value.
The NFIB Small Business Legal Center protects small business owners' rights in courts nationwide and is currently active in more than 40 cases across federal and state courts, including at the U.S. Supreme Court.
###
