Title 26 — Internal Revenue CodeRelease 119-73not60
§2703 Certain Rights and Restrictions Disregarded
Title 26 › Subtitle Subtitle B— Estate and Gift Taxes › Chapter 14— SPECIAL VALUATION RULES › § 2703
Summary
When valuing property for these tax rules, ignore two things: any option or agreement that lets someone buy or use the property for less than its market value, and any rule that limits selling or using the property. That rule does not apply if all three are true: the option or restriction is a real business arrangement, it is not a way to give the property to family for less than full value, and its terms are like those in similar deals between unrelated parties.
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 5, 2026
Release point: 119-73not60