Proposed Regulations Under IRC Section 2704

For many people the concept of making gifts of property or equity interests in entities such as corporations, partnerships or limited liability companies to loved ones during lifetime or making devises to them by Will after death has been a commonplace Estate Planning tool. What also has been common is the use of a reduction in value for gift and estate tax purpose of those gifted interests or the retained interests when less than fifty (50%) percent of the equity is transferred or retained. That reduction in value is called the "Lack of Control" Discount. A further reduction in value is received when the interest transferred is not readily marketable because of restrictions imposed in the agreement controlling the transfer of those interests. That reduction in value is called the Lack of Marketability Discount. When both Discounts are taken, the taxable value of the gift made or interest retained can be reduced by as much as 40% to 45%, so that a twenty (20%) percent