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(B) with respect to which either of the
following applies:
(i) The restriction lapses, in
whole or in part, after the transfer
referred to in paragraph (1).
(ii) The transferor or any
member of the transferor's family,
either alone or collectively, has
the right after such transfer to
remove, in whole or in part, the
restriction.
(3) Exceptions.--The term “applicable restriction”
shall not include--
* * * * * * *
(B) any restriction imposed, or required to be
imposed, by any Federal or State law.
Section 25.2704-2(b), Gift Tax Regs., provides that an applicable
restriction is a restriction on “the ability to liquidate the
entity (in whole or in part) that is more restrictive than the
limitations that would apply under the State law generally
applicable to the entity in the absence of the restriction.”
In sum, section 2704(b) generally provides that, where a
transferor and his family control a corporation or partnership, a
restriction on the right to liquidate the corporation or
partnership shall be disregarded in determining the value of an
interest that has been transferred from the transferor to a family
member if, after the transfer, the restriction on liquidation
either lapses or can be removed by the family.
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