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THE END MAY (REALLY) BE NEAR FOR  
DISCOUNT PLANNING 
We previously reported to you that the IRS planned to publish new rules related to Internal Revenue Code Section 2704 that could affect taxpayers' ability to take discounts on gifts of partnership interests.  This was based on comments made by Cathy Hughes of the Department of Treasury at a May 2015 American Bar Association Tax Section meeting.  In the past, discounts of gifted partnership interests have been recognized in tax court cases, because limited partners frequently lack control over the underlying assets held by a partnership and cannot easily sell their partnership interest. 
 
A whole year has passed, and Section 2704 guidance has not been released to date.  However, at the American Bar Association Tax Section meeting earlier this month, Ms. Hughes left conference attendees with the impression that proposed regulations on Section 2704 would be issued "very, very shortly."  Many are now speculating that we will see proposed regulations before the end of June 2016.
 
You may be familiar with Aesop's fable about the boy who cried wolf.  At the risk of "crying wolf," we wanted to apprise you that our best sources think these regulations are coming out very soon.  New rules may very well bring about the loss of estate planning opportunities.  If you or your clients have been on the fence about a gift or sale of interest in a closely-held entity, now is the time to consult with your advisors.  The wolf may be near.
 
Marvin E. Blum and Christine S. Wakeman 
 
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