appreciate, none of that appreciation would be used to pay the first 4 years of outstanding preferred payments as would be required if the original Freeze Entity was not liquidated. In fact, the 4-year grace period should start anew as a technical matter. However, liquidating and reforming the Freeze Entity

ple #8: B contributed Property X in Year 1 with $1,000 of appreciation, and that is the only contribution made by B to the Freeze Entity. In Year 8, Freeze Entity distributes Property Z (an appreciated non-marketable security). This distribution should be tax free. In-Kind Distribution Within Seven Years of I