Proposed Regulations Under Section 2704

On August 2, the United States Treasury Department issued proposed regulations under Section 2704 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). These proposed regulations, if finally adopted in their current form, would have a substantial negative effect on the ability of owners of interests in family-controlled entities (including domestic and foreign corporations, partnerships, and LLCs) to take advantage of valuation discounts for gift, estate and generation-skipping transfer tax purposes when transferring interests in such entities to family members. The proposed regulations would apply to both lifetime gifts and transfers at death, as well as to sales for consideration.