IRS Copyright Mark Wilson, Getty Images

New IRS Budget Bill and the Proposed 2704 Regs

The speculation continues.

On June 28, 2017, according to taxnotes.com, the House Appropriations Financial Services and General Government Subcommittees unveiled the Internal Revenue Service's budget for fiscal year 2018, which includes a controversial guidance project that relates to the trust and estates field.

According to the bill, the IRS would be prohibited from finalizing, implementing or enforcing proposed estate-tax valuation regulations (Section 2704 or REG-163113-02) released last August. These regulations affect the valuation of interests in corporations and partnerships of all types for estate, gift and generation-skipping transfer-tax purposes. The IRS received more than 10,000 comments on the proposed regulations and was urged to withdraw them during a public hearing in December of 2016. It was expected that there might be “new” proposed regulations sometime in 2017, with a much more restricted scope and range of applications. This hasn’t happened.

It’s still too early in the review process to determine whether or not this provision will remain, therefore continuing to cause speculation and debate about the future of the proposed regulations.

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