### Question
What does applicable retained interest mean?


### Answer
**Applicable retained interest** has the following meaning in *26 U.S.C. § 2701*:

> any interest in an entity with respect to which there is—


(A) a distribution right, but only if, immediately before the transfer described in subsection (a)(1), the transferor and applicable family members hold (after application of subsection (e)(3)) control of the entity, or


(B) a liquidation, put, call, or conversion right

#### Citation:
  - *26 U.S.C. § 2701*
  - Heading: **Subtitle B-Estate and Gift Taxes > CHAPTER 14-SPECIAL VALUATION RULES**

