We have been providing you with information and updates on proposed regulations under Section 2704 of the Internal Revenue Code since August 2016, which can be found here:
As discussed in those articles, the proposed regulations under section 2704 appeared to put an end to, or significantly reduce, the use of discounts for lack of marketability and lack of control that are often applied when transferring ownership interests in certain family-owned businesses.
On October 2, 2017, the Department of the Treasury released its second report, Identifying and Reducing Tax Regulatory Burdens, in response to President Trump’s executive order earlier in the year calling for review of all “significant tax regulations.” In the Treasury’s report, eight proposed regulations, including Section 2704, are discussed along with its findings.
In this report, the Treasury announced that it plans to withdraw the 2704 regulations in their entirety. While the issuance of the report does not in and of itself result in a formal withdrawal of the regulations, the withdrawal will become official once it is published to Federal Register, which is expected to occur soon.
We will continue to monitor additional information and news regarding Section 2704 and provide updates on any new developments. For additional questions, contact Schneider Downs or visit the Our Thoughts On blog.