§ 2704. Treatment of certain lapsing rights and restrictions
(a)
Treatment of lapsed voting or liquidation rights
(1)
In general
For purposes of this subtitle, if—
(B)
the individual holding such right immediately before the lapse and members of such individual’s family hold, both before and after the lapse, control of the entity,
such lapse shall be treated as a transfer by such individual by gift, or a transfer which is includible in the gross estate of the decedent, whichever is applicable, in the amount determined under paragraph (2).
(2)
Amount of transfer
For purposes of paragraph (1), the amount determined under this paragraph is the excess (if any) of—
(b)
Certain restrictions on liquidation disregarded
(1)
In general
For purposes of this subtitle, if—
(A)
there is a transfer of an interest in a corporation or partnership to (or for the benefit of) a member of the transferor’s family, and
(B)
the transferor and members of the transferor’s family hold, immediately before the transfer, control of the entity,
any applicable restriction shall be disregarded in determining the value of the transferred interest.
(2)
Applicable restriction
For purposes of this subsection, the term “applicable restriction” means any restriction—
(3)
Exceptions
The term “applicable restriction” shall not include—
(4)
Other restrictions
The Secretary may by regulations provide that other restrictions shall be disregarded in determining the value of the transfer of any interest in a corporation or partnership to a member of the transferor’s family if such restriction has the effect of reducing the value of the transferred interest for purposes of this subtitle but does not ultimately reduce the value of such interest to the transferee.
(c)
Definitions and special rules
For purposes of this section—