On February 25, 2014, the IRS issued final regulations3 clarifying the Section 83 definition of “substantial risk of forfeiture” as follows:
A risk of forfeiture may be established only through a service condition or a condition related to the purpose of the transfer.
Both the likelihood of a forfeiture event and the likelihood the forfeiture will be enforced must be considered in evaluating whether a service condition is related to a purpose of the transfer in establishing whether there is a Section 83 substantial risk of forfeiture.