Is Chief Counsel Resurrecting the Chapter 14 ‘Monster’?


Richard Dees authored this bylined article criticizing the IRS Chief Counsel’s memorandum on Section 2701 of Internal Revenue Code Chapter 14, concerning special valuation when the fair market value standard is inadequate. The memorandum covered the gift tax consequences of a limited liability company recapitalization, and Mr. Dees wrote that “although the gift tax result in the memorandum is probably close to correct, almost none of its analysis is. The IRS failed to properly apply the regulations under section 2701, … [which] proves only that the IRS has as much trouble understanding section 2701 as taxpayers and their advisers do.”