Divorce Mediation Blog

Rule 2704 Opposition - Talking Points

Wednesday, November 23, 2016

Recently, we blogged about the Internal Revenue Service proposed new section 2704 rules, which if enacted in their current form would create a new minimum value for businesses subject to intra-family transactions, and essentially eliminate discounts for marketability in that context.

Many in the business appraisal and estate planning communities are up in arms, and they mobilizing to defeat this IRS move, before it becomes entrenched.

While keeping an eye on unfolding commentary, we ran across “talking points” suggested by the American Society of Appraisers for use in opposing the new regulations. In summary they are:

  1. By increasing the value of fractional interests in family businesses, the new rules would result in an "stealth" tax increase of 25-50% in estate and gift taxes.
  2. By treating intra-family actors as "known parties", rather than hypothetical buyers and sellers, the rule would disregard the reality that a fractional interest is in fact, fractional, and not controlling, reducing its economic value.
  3. The notion that families will always work in concert has been rejected previously by the United States Supreme Court.
  4. The suggestion that intra-family transfers should be treated differently than those between unrelated parties is unsupported by any public reasoning advanced by the IRS.
  5. The proposed rule may put IRS regulations on a collision course with various state laws which recognize applicability of marketability discounts.
  6. This new approach will cause family-owned businesses to delay capital investment, and inhibit new hiring, as they preserve cash for pain increased taxes.

As divorce mediators and arbitrators, a former Probate judge, and litigators-in-recovery, we are used to this approach from Bernier, in the divorce context, but in estate and gift taxation?

What do you think?

Get e-mail notifications of new blog posts! Enter email address below.:

Delivered by FeedBurner

other articles

recent posts


family law arbitrator DOMA divorce process Divorce Baseball Massachusetts divorce mediators med/arb lawyers separation high-risk methodology family and probate law disputes divorce mediations divorce mediators resolve disputes Massachusetts alimony and child support Levine Dispute Resolution IRC §2704 Matrimonial Arbitration arbitration alimony reform legislation annulment family law disputes Levine Dispute Resolutions Self-adjusting alimony orders divorce lawyers divorce and family law mediators lawyer-attended mediation pre-ARA alimony divorce judgment Obamacare Cohabitation Boston conciliation Massachusetts divorce lawyers lawyer mediations Massachusetts Lawyers Weekly Act Reforming Alimony in the Commonwealth mediators Baseball Players mediation support orders divorce arbitration Levine Dispute Resolution Center LLC divorce mediator how baseball arbitration works alimony medical benefits Massachusetts General term alimony facilitated negotiations Major League Baseball Arbitration Divorce Agreements Levine Dispute Resolution Center dispute resolution divorce and family law health insurance litigation arbitrator family law mediation Baseball Arbitration divorce agreement mediator divorce litigation rehabilitative alimony divorced Massachusetts lawyers alimony statute Massachusetts Alimony Reform Act Chouteau Levine arbitrators Family Law Arbitration alimony law family mediation divorce mediation The Seven Sins of Alimony divorce arbitrators traditional negotiations fraud special master Defense of Marriage Act SJC health coverage alimony orders self-adjusting alimony child support Alimony Reform Act COLA Same Sex Marriage med-arb family law arbitrators private dispute resolution MLB labor agreement divorce arbitrator Child Support Guidelines LDRC Massachusetts alimony family support Uniform Arbitration Act