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In 1990, section 2703 was enacted. Omnibus Budget
Reconciliation Act of 1990 (OBRA), Pub. L. 101-508, sec.
11602(a), 104 Stat. 1388-491. It provides that any agreement to
acquire property at less than its fair market value will be
disregarded in valuing such property for Federal estate tax
purposes unless the agreement satisfies certain requirements
enumerated in the statute. Those requirements include the
requirements of preexisting law that the agreement be a bona fide
business arrangement and not a testamentary device as well as a
new requirement that the terms of the agreement be comparable to
those of similar arrangements negotiated at arm’s length. Sec.
2703(b). Section 2703 applies to agreements created or
substantially modified after October 8, 1990. OBRA sec.
11602(e), 104 Stat. 1388-500; sec. 25.2703-2, Gift Tax Regs.
As the legislative history makes clear, section 2703 was
intended to supplement, not supplant, the existing legal
requirements: “The bill does not otherwise alter the
requirements for giving weight to a buy-sell agreement. For
example, it leaves intact present law rules requiring that an
agreement have lifetime restrictions in order to be binding on
14(...continued)
Commissioner, T.C. Memo. 1974-39 (to same effect).
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