Valuation Discount (DLOM / DLOC)
Reductions applied to the fair market value of a business interest to reflect lack of marketability (DLOM, typically 15–35%) and lack of control (DLOC, typically 15–25%). Used in gift and estate tax planning to transfer more value within exemption limits. Discounts on minority interests in family businesses are a powerful succession planning tool but face increasing IRS scrutiny.
Where This Matters
Passing a business to the next generation — family dynamics, valuation for transfer, gift/estate tax strategy, and management transition.
Legal strategies to reduce business and personal tax burden — entity optimization, deferred compensation, retirement planning, California-specific tactics.
Everything business owners need to know about selling, exiting, or transitioning out of their company — from valuation to tax strategy to deal structure.
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