#### § 25.2701-0 Table of contents.

This section lists the major paragraphs contained in §§ 25.2701-1 through 25.2701-8.

## § 25.2701-1 Special valuation rules in the case of transfers of certain interests in corporations and partnerships.

(a) In general.

(1) Scope of section 2701.

(2) Effect of section 2701.

(3) Example.

(b) Transfers and other triggering events.

(1) Completed transfers.

(2) Transactions treated as transfers.

(3) Excluded transactions.

(c) Circumstances in which section 2701 does not apply.

(1) Marketable transferred interests.

(2) Marketable retained interests.

(3) Interests of the same class.

(4) Proportionate transfers.

(d) Family definitions.

(1) Member of the family.

(2) Applicable family member.

(3) Relationship by adoption.

(e) Examples.

## § 25.2701-2 Special valuation rules for applicable retained interests.

(a) In general.

(1) Valuing an extraordinary payment right.

(2) Valuing a distribution right.

(3) Special rule for valuing a qualified payment right held in conjunction with an extraordinary payment right.

(4) Valuing other rights.

(5) Example.

(b) Definitions.

(1) Applicable retained interest.

(2) Extraordinary payment right.

(3) Distribution right.

(4) Rights that are not extraordinary payment rights or distribution rights.

(5) Controlled entity.

(6) Qualified payment right.

(c) Qualified payment elections.

(1) Election to treat a qualified payment right as other than a qualified payment right.

(2) Election to treat other distribution rights as qualified payment rights.

(3) Elections irrevocable.

(4) Treatment of certain payments to applicable family members.

(5) Time and manner of elections.

(d) Examples.

## § 25.2701-3 Determination of amount of gift.

(a) Overview.

(1) In general.

(2) Definitions.

(b) Valuation methodology.

(1) Step 1—Valuation of family-held interests.

(2) Step 2—Subtract the value of senior equity interests.

(3) Step 3—Allocate the remaining value among the transferred interests and other family-held subordinate equity interests.

(4) Step 4—Determine the amount of the gift.

(5) Adjustment in Step 2.

(c) Minimum value rule.

(1) In general.

(2) Junior equity interest.

(3) Indebtedness.

(d) Examples.

## § 25.2701-4 Accumulated qualified payments.

(a) In general.

(b) Taxable event.

(1) In general.

(2) Exception.

(3) Individual treated as interest holder.

(c) Amount of increase.

(1) In general.

(2) Due date of qualified payments.

(3) Appropriate discount rate.

(4) Application of payments.

(5) Payment.

(6) Limitation.

(d) Taxpayer election.

(1) In general.

(2) Limitation not applicable.

(3) Time and manner of election.

(4) Example.

## § 25.2701-5 Adjustments to mitigate double taxation.

(a) Reduction of transfer tax base.

(1) In general.

(2) Federal gift tax modification.

(3) Federal estate tax modification.

(4) Section 2701 interest.

(b) Amount of reduction.

(c) Duplicated amount.

(1) In general.

(2) Transfer tax value—in general.

(3) Special transfer tax value rules.

(d) Examples.

(e) Computation of reduction if initial transfer is split under section 2513.

(1) In general.

(2) Transfers during joint lives.

(3) Transfers at or after death of either spouse.

(f) Examples.

(g) Double taxation otherwise avoided.

(h) Effective date.

## § 25.2701-6 Indirect holding of interests.

(a) In general.

(1) Attribution to individuals.

(2) Corporations.

(3) Partnerships.

(4) Estates, trusts, and other entities.

(5) Multiple attribution.

(b) Examples.

## § 25.2701-7 Separate interests.

## § 25.2701-8 Effective dates.

[T.D. 8395, 57 FR 4255, Feb. 4, 1992, as amended by T.D. 8536, 59 FR 23154, May 5, 1994]