IRC Section 2703

Definition

A provision of the Internal Revenue Code that allows the IRS to disregard a contractually fixed price in a buy-sell agreement when determining the fair market value of a business interest for estate tax purposes. To avoid invalidation under Section 2703, the agreement must meet specific requirements, including being a bona fide business arrangement and reflecting an arm's-length price. This rule is a common landmine in estate plans that use artificially low fixed prices to reduce estate tax exposure.