### Question
What does applicable restriction mean?


### Answer
**Applicable restriction** has the following meaning in *26 U.S.C. § 2704*:

> any restriction—


(A) which effectively limits the ability of the corporation or partnership to liquidate, and


(B) with respect to which either of the following applies:


(i) The restriction lapses, in whole or in part, after the transfer referred to in paragraph (1)

#### Citation:
  - *26 U.S.C. § 2704*
  - Heading: **Subtitle B-Estate and Gift Taxes > CHAPTER 14-SPECIAL VALUATION RULES**

