Business owners may have only a short time to take advantage of a tax strategy that is used to reduce estate and gift taxes for heirs.

The U.S. Treasury Department has proposed eliminating the rule that allows business owners to discount the value of closely held businesses and minority shares in businesses for tax purposes when transferring the assets to family.

Assets valued at more than $5.45 million for an individual or $10.9 million for a couple are subject to gift taxes if given away while the person is alive or estate taxes if inherited when the owner dies. The Treasury Department estimates that transfer taxes apply to about 10,000 estates a year.

Discounts on the value of the business are currently allowed if the shares of the company cannot be sold at full market price.

“For instance, if someone owns 10 percent of a business and wants to transfer that to an heir, a buyer is probably not going to give you full market value for the minority shares, so the value is discounted,” says Edward Renn, a tax and estate planning expert with the international law firm Withers Bergman.

Discounts can range from 15 percent to about 45 percent, but most are in the low- to mid-30s, says Renn.

Because the IRS has proposed eliminating this rule, Renn advises business owners who are considering transferring businesses or shares of a business to do so before any changes are made in the regulation.

“You can’t let the tax tail wag the dog and many business owners will not be ready to make a transfer in the next few months,” he says. “But for those who are considering it, the move should be made now rather than waiting.”

For those who have already transferred assets using the discounts, the deals will not be affected, he says.

“But the opportunity that is available now is probably going to be lost. The IRS would not have issued the new regulation if it did not intend to make a change.”