### Question
Can you define what applicable restriction means?


### Answer
**Applicable restriction** is defined as the following 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**

