In December, we posted a blog discussing a much anticipated hearing held on the Treasury Department’s issuance of proposed regulations under Section 2704 of the Internal Revenue Code (sometimes referred to as the 2704 proposed regulations) that could significantly impact the valuation of interests in family-owned businesses for estate and gift tax purposes. Comments made by Treasury Department representatives at the December 1 hearing allayed some early concerns regarding the scope and impact of the 2704 proposed regulations. However, many questions regarding the future of the proposed regulations still remained after the hearing adjourned.
Additional news regarding the future of the 2704 proposed regulations came in the first few days of the 115th U.S. Congress. New bills were introduced in the House and the Senate to prevent the Treasury Department and Internal Revenue Service from finalizing the 2704 proposed regulations. The House bill (H.R. 308) was introduced by Rep. Warren Davidson (R-Ohio) and referred to the House Committee on Ways and Means. It essentially prohibits funds from being used to finalize, implement, administer or enforce the 2704 proposed regulations. The related Senate bill (S. 47) was introduced by Sen. Marco Rubio (R-Fla.) and referred to the Senate Finance Committee.
We will continue to post updates regarding H.R. 308 and S. 47 as they progress through committee, and any activity by the new Congress and administration regarding estate and gift tax issues of importance to family business owners.