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(A) there is a transfer of an interest in a
corporation or partnership to (or for the benefit of) a
member of the transferor's family, and
(B) the transferor and members of the transferor's
family hold, immediately before the transfer, control
of the entity,
any applicable restriction shall be disregarded in
determining the value of the transferred interest.
(2) Applicable restriction.--For purposes of this
subsection, the term "applicable restriction" means any
restriction--
(A) which effectively limits the ability of the
corporation or partnership to liquidate, and
(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., further defines an
applicable restriction as follows:
(b) Applicable restriction defined. An applicable
restriction is a limitation 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. * * *
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Last modified: May 25, 2011