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


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