Successful families often create multiple generations of entrepreneurs and businesspeople. In some families, younger generations start private equity funds and raise capital from both family and outside investors. It is not uncommon for a senior generation to support the business endeavors of their children and grandchildren by investing their own assets or from funds already set aside in trust. While straightforward on its face, these situations may result in unintended gift tax consequences under the Internal Revenue Code (IRC) Sec. 2701 special valuation rules that can impact the private equity industry.

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