Title 26 — Internal Revenue CodeRelease 119-73
§2703 Certain Rights and Restrictions Disregarded
Title 26 › Subtitle Subtitle B— Estate and Gift Taxes › Chapter 14— SPECIAL VALUATION RULES › § 2703
Summary
When property is valued for estate and gift taxes, options or agreements that let someone buy or use it for less than fair market value are ignored, and so are restrictions on selling or using it. There is an exception when the arrangement is a real business deal, is not a scheme to pass property to the decedent's family on the cheap, and has terms like those strangers would agree to at arm's length.
Full Legal Text
Title 26, §2703
Internal Revenue Code — Source: USLM XML via OLRC
(a)For purposes of this subtitle, the value of any property shall be determined without regard to—
(1)any option, agreement, or other right to acquire or use the property at a price less than the fair market value of the property (without regard to such option, agreement, or right), or
(2)any restriction on the right to sell or use such property.
(b)Subsection (a) shall not apply to any option, agreement, right, or restriction which meets each of the following requirements:
(1)It is a bona fide business arrangement.
(2)It is not a device to transfer such property to members of the decedent’s family for less than full and adequate consideration in money or money’s worth.
(3)Its terms are comparable to similar arrangements entered into by persons in an arms’ length transaction.
Reference
Citations & Metadata
Citation
26 U.S.C. § 2703
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73