Remember all that time and energy you put into figuring out what the proposed regulations under Section 2704 were all about? Well, you’re going to want to try to find a way to get that back. The proposed regulations, the purpose of which was to limit the amount of discounts individuals take when gifting or selling interest in family owned entities, are going to be withdrawn.

The proposed regulations under Section 2704 have been the subject of much speculation and controversy. First, the proposed regulations were going to be issued prior to the 2015 fall meeting of the ABA which was September 17-19, 2015. Then they were going to be issued by the end of the 2015 calendar year. Needless to say, they were not issued in 2015.

The proposed regulations were finally issued almost a year later on August 4, 2016. Following the issuance of the proposed regulations, many planners urged clients to consider gifting or selling interests in family entities prior to the proposed regulations being finalized in order to take advantage of discounts while they were still available.

Then, after receiving numerous comments from taxpayers and practitioners, the Treasury Department changed its mind. On October 4, 2017, the Treasury Department announced that the proposed regulations under 2704 will be withdrawn in their entirety because “the proposed regulations’ approach to the problem of artificial valuation discounts is unworkable.”