After the IRS’s Tax Court losses, estate planners began recommending that taxpayers create family holding companies, just to generate the discount. The Waltons have held their Wal- Mart stake in a family limited partnership or similar structure since 1953. Typical discounts are 20 to 30 percent.
‘Beyond Belief’
“It’s beyond belief,” said Wendy Gerzog, a professor at the University of Baltimore and a former U.S. tax court lawyer who has written extensively about the discounts. She said the practice creates “a world of unreality.”
Morgan, the Walton family spokesman, declined to say whether the Waltons have ever claimed such discounts.
McDermott and other lawmakers, and the Treasury Department under both U.S. Presidents Bill Clinton and Barack Obama, have proposed eliminating some discounts involving transfers between family members. The Obama administration estimated that its most recent proposal, submitted in 2012, would raise an extra $18.1 billion over 10 years. None of the proposals have gone anywhere.
Not long before Helen Walton created her first Jackie O. trust, her former sister-in-law won a court victory validating another tool to fend off the estate tax.
As with the Jackie O. trust, this maneuver exploits the inevitable discrepancy when tax officials try to value future gifts.
‘Aunt Audie’
In 1993, Audrey Walton put $200 million of Wal-Mart stock into a pair of “grantor retained annuity trusts” or GRATs, to benefit her daughters, Ann and Nancy.
Audrey Walton is the ex-wife of James L. “Bud” Walton, Sam’s younger brother and a co-founder of the retail chain. Sam’s children know her as “Aunt Audie.” A resident of tiny Versailles, Missouri, Audrey Walton, 89, has been a major supporter of University of Central Missouri, where the Mules play in the Audrey J. Walton Stadium.