§2703 — Certain rights and restrictions disregarded

§ 2703 is inapplicable.

- 21 - [*21] asks for summaryjudgment that section 2703(a) does not apply.¹° For the reasons discussed below, we conclude that summaryjudgment for the estate is inappropriate as to this issue.

Section 2703 As noted supra note 8: (1) section 2703(a)(2) provides that, for estate and gift tax purposes, the value ofany property is determined without regard to any restriction on the right to sell or use such property, (2) section 2703(b) provides that section 2703(a) does not apply to disregard a right or restriction ifit meets certain requirements, and (3) petitioners concede that neither the cotenants' agreement nor the art lease satisfies the section 2703(b) exception.

I - 32 - 2703(a) does not apply to disregard a restriction if the restriction meets each of the following three requirements: (1) It is a bona fide business arrangement.

2703(a), I.R.C., does not apply to the partnership agreement.

-3- [*3] not, we must determine the fair market values of the split-dollar rights including whether the special valuation rule of section 2703 applies to require that the valuation disregard a provision in the split-dollar agreements that restricts the parties’ right to unilaterally terminate the agreements.

170, 191 (2008) (applying section 2703 to disregar d restrictions in a partnership agreement) .

Section 2703 As noted supra note 8: (1) section 2703(a)(2) provides that, for estate and gift tax purposes, the value of any property is determined without regard to any restriction on the right to sell or use such property, (2) section 2703(b) provides that section 2703(a) does not apply to disregard a right or restriction if it meets certain requ

Introduction In pertinent part, section 2703(a) provides that, for purposes of the gift tax, the value of any property transferred by gift is determined without regard to any right or restriction (without distinction, restriction) relating to the property. Paragraphs 9.1, 9.2, and 9.3 of the partnership agreement (paragraphs 9.1, 9.

ermining the value of D’s shares for Federal estate tax purposes because D had the unilateral ability to modify the agreement, rendering the agreement not binding during D’s lifetime, as required by sec. 20.2031-2(h), Estate Tax Regs. Held, further: Sec. 2703, I.R.C., applies to the modified agreement because the 1996 modification, which occurred after the effective date of sec. 2703, I.R.C., was a substantial modification. Held, further: The modified agreement is also disregarded under sec. 270

Respondent argues that the 1987 redemption agreement does not establish the fair market value of decedent’s shares because: (1) The 1987 redemption agreement is not a binding contract under New York law, (2) section 2703 requires that we disregard the 1987 redemption agreement, and (3) the price established by the 1987 redemption agreement cannot be trusted because the agreement is simply a substitute for a testamentary device.

Section 2703 Section 2703(a)(1) provides that the value of any property must be determined without regard to “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).” Section 2703(b) provides an exception to section 2703(a)

170, 191 (2008) (applying section 2703 to disregard restrictions in a partnership agreement).

Section 2703, enacted in 1990, also governs restrictive agreements. Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508, sec. 11602, 104 Stat. 1388-491. The general rule of section 2703 is that any agreement to acquire property at less than its fair market value will be disregarded for Federal estate tax purposes unless the agreement satisfi

We conclude that Congress did not intend, by the enactment of section 2703, to treat partnership assets as if they were assets of the estate where the legal interest owned by the deGedent at the time of death was a limited partnership or corporate interest.

2703 and added provisions to 25 U.S.C. sec. 2718 authorizing appropriation of necessary funds for operation of the NIGC for fiscal years beginning Oct. 1, 1991 and 1992. In 1992, the Federal Indian Statutes: Technical Amendments, Pub. L. 102-497, sec. 16, 106 Stat. 3255, 3261 (1992), current version at 25 U.S.C. sec. 2703 (Supp. 2000), struck

that extended the existing leases on the ranch properties and, if so, whether the oral options or the existing leases were a restriction on the sale or use of the ranch properties that should be disregarded for estate tax valuation purposes under section 2703. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect on the date of decedent's death, and all Rule references are to the Tax Court Rules of Practice and Procedure. FINDINGS OF FACT Some of the fact

Petitioners’ Assertion That Respondent Impermissibly Applied Section 2703 Retroactively .

Petitioners’ Assertion That Respondent Impermissibly Applied Section 2703 Retroactively .

t v. Commissioner, T.C. Memo. 1997-380; Estate of Lauder v. Commissioner, T.C. Memo. 1992-736; see also sec. 20.2031-2(h), Estate Tax Regs. We find that the option provision in each of the partnership agreements represents a testamentary device to 6 Sec. 2703, relating to the valuation of property subject to options, is not applicable to an agreement entered into before Oct. 9, 1990, unless there has been substantial modification since Oct. 8, 1990. See Omnibus Budget Reconciliation Act of 1990,