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Monday, January 09, 2017

Treasury Department Unofficial Statements on Proposed Section 2704 Regulations

There is a lot of uncertainty whether the Section 2704 proposed regulations will ever be finalized, either due to policy to be set by President-elect Trump, and/or Congressional efforts to block those regulations. Nonetheless, practitioners still need to keep an eye on this project in the event they are finalized.

Kathy Veihmeyer Hughes of the Treasury Department’s Office of Tax Policy, provided some information on the project and what was intended by the proposed regulations in speaking to the Heckerling Institute on Estate Planning today in Orlando, Florida. Some key points (some of which have been previously put out there at other conferences) include:

a. Treasury is working on digesting the comments received at the December hearing on the regulations, and will be revising the regulations. There will not be an attempt to revise them and finalize them before President-elect Trump’s election, as some have feared.

b. The regulations are not intended to do away with minority interest discounts.

c. The regulations do not require valuations always be made in conformity with a deemed put right.

d. The three year rule as to including transfers occurring within 3 years of death in estate tax valuation adjustments will NOT be retroactive to transfers made before the effective date of the final regulations.

e. The regulations will not have an effective date prior to the date of issuance of the final regulations, and for some, prior to 30 days after issuance of the final regulations.

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