Oct 1, 2010 12:00 PM

Public documents provide objective evidence of comparability under IRC Section 2703

By Francis X. Burns, Gabriel T. Ratliff & Julia R. Rowe

Since the enactment of Internal Revenue Code Section 2703, the U.S. court system and the business valuation community have debated the meaning of that section and how it applies to estate and gift tax valuations. Increasingly, the government is using IRC Section 2703 to challenge specific provisions within agreements — including limited partnership (LP) agreements — that taxpayers claim restrict value and justify larger valuation discounts.

To date, case law regarding Section 2703 and how it applies to these provisions and the valuation of entities like LPs has been neither extensive nor definitive. While early cases dealt with the applicability of Section 2703 to the partnership form itself, more recently the cases have focused on the section's three safe harbor criteria. Our attention is on the third safe harbor provision — Section 2703(b)(3), which requires that restrictive terms be comparable to those of similar arrangements entered into by parties dealing at arm's length.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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