Gift, Estate, & Income Tax Compliance

February 1, 2022

Mercer Capital’s Value Matters® 2022-02

2022 Tax Update for Estate Planners and Family Businesses

Excerpted from Mercer Capital’s Family Business Director Blog

As we highlighted previously in the Family Business Director blog, companies are beginning to batten down the hatches and prepare for stormy weather.  The risk of a recession continues to escalate, and inflation printed a new four-decade high in May 2022.  Former Fed Chair and current Treasury Secretary, Janet Yellen, appeared before Congress to answer questions regarding inflation, which she sees as staying elevated for an extended period.  Gas prices hit a nationwide average of $5 a gallon for the first time ever in the United States, and little relief is on the horizon.

The Fed expects to continue raising rates to battle inflation, and a new law was passed unanimously in the House and Senate to ban the word “transitory,” which awaits President Biden’s signature. Well, maybe the last one was just floated in committee.

All to say, companies and consumers alike are feeling the squeeze, and markets are reflecting less-than-rosy expectations. At the time of this writing, the S&P 500 was down almost 16% year-to-date, while the Russell 2000 was down almost 19%.  Outside the energy sector, stocks are bleeding red in 2022 (see Figure 1).  Lower broad market pricing translates to lower valuations for family businesses.

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