Defined Value Clauses Better DefinedDefined Value Clauses Better Defined

Scott A. Bowman

After a 2006 opinion from the U.S. Court of Appeals for the Fifth Circuit in McCord v. Commissioner,¹ many practitioners expanded their use of defined value clauses for certain transfer tax planning strategies. But many lawyers remained reluctant to implement the technique without further assurance. Although McCord offered positive precedent, particularly in the Fifth Circuit's jurisdiction, the cautious noted that the decision did not address head-on the Internal Revenue Service's public policy arguments lurking in the Fourth Circuit's 1944 opinion in Comm'r v. Procter.² Fears persisted that, outside the Fifth Circuit, adverse precedent from Procter and its progeny regarding transfer tax savings clauses might be applied t...