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applied to agreements, options, rights, or restrictions entered
into, granted, or substantially modified after October 8, 1990.36
See OBRA sec. 11602(e)(1)(A)(ii), 104 Stat. 1388-500.
The Senate bill (S. 3209) explained that the rules requiring
options, rights, or restrictions (1) to be bona fide business
arrangements and (2) not to be devices to transfer property to
members of the decedent’s family for less than full and adequate
consideration in money or money’s worth, see secs. 2703(b)(1) and
35(...continued)
(a) General Rule.--For purposes of this subtitle, the
value of any property shall be determined without regard
to--
(1) any option, agreement, or other right to
acquire or use the property at a price less than the
fair market value of the property (without regard to
such option, agreement, or right), or
(2) any restriction on the right to sell or use
such property.
(b) Exceptions.--Subsection (a) shall not apply to any
option, agreement, right, or restriction which meets each of
the following requirements:
(1) It is a bona fide business arrangement.
(2) It is not a device to transfer such property
to members of the decedent’s family for less than full
and adequate consideration in money or money’s worth.
(3) Its terms are comparable to similar
arrangements entered into by persons in an arms’ length
transaction.
36We summarize sec. 2703 to complete our analysis of the
evolution of legal standards on the ability of buy-sell
agreements to control estate tax value. However, the parties
have stipulated that the provisions of sec. 2703 do not apply to
the cases at hand. See supra note 23.
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