Chapter 14: lapsing rights....Sec. 2704(a) provides that if there is a lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine. ["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. of any voting or liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy right in connection with a family-controlled corporation or partnership, the lapse will be treated as a transfer for estate and gift tax purposes. Sec. 2704 was enacted to prevent results similar to that in Harrison, TC Memo 1987-8. In Harrison, the decedent An individual who has died. The term literally means "one who is dying," but it is commonly used in the law to denote one who has died, particularly someone who has recently passed away. and his children each held a general and limited partnership interest immediately before the decedent's death. The Tax Court held that the decedent's right as a general partner to liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the the partnership, which lapsed LEGACY, LAPSED. A legacy is said to be lapsed or extinguished, when the legatee dies before the testator, or before the condition upon which the legacy is given has been performed, or before the time at which it is directed to vest in interest has arrived. Bac. Ab. Legacy, E; Com. Dig. at death, could not be taken into account in determining the value of the decedent's limited partnership interest. Thus, the value of the decedent's interest was determined to be less than its value immediately before the decedent's death or its value in the hands of his family immediately after his death. Sec. 2704(b) provides that certain restrictions on liquidation are disregarded in valuing transferred interests in an entity. The amount of the transfer is the value of all interests in the entity before the lapse over the value of the interests after the lapse. Prop. Regs. Sec. 25.2704-1(f)(2)(ii) provides that, in case of a lapse during life, the value of any consideration received by the holder of the interests due to the lapse is included in the determination of the interests, value after the lapse. In addition, any restriction that limits the ability of a corporation or partnership to liquidate is ignored in a family context if --the transferor and family members control the entity, and --the restriction lapses after the transfer or can be removed by the transferor or family members (alone or together). Prop. Regs. Sec. 25.2704-2(c) provides that, if a restriction is disregarded under this section, the transferred interest subject to the restriction is valued as if the restriction did not exist and as if the transferor's rights were determined under the state law that would apply but for the limitation. The rules dealing with lapsing lapse v. lapsed, laps·ing, laps·es v.intr. 1. a. To fall from a previous level or standard, as of accomplishment, quality, or conduct: rights and restrictions appear to be primarily aimed at potentially abusive situations. Thus, they should not eliminate other valuation assumptions, such as the use of minority discounts; the use of lack-of-marketability discounts; and the use of fragmentation (1) Storing data in non-contiguous areas on disk. As files are updated, new data are stored in available free space, which may not be contiguous. Fragmented files cause extra head movement, slowing disk accesses. A defragger program is used to rewrite and reorder all the files. discounts. |
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