If given their druthers, most transactional corporate attorneys would prefer to spend their day practicing “happy law,” by which they typically mean transactions that involve capital formation, mergers and acquisitions, joint...more
8/20/2024
/ Board of Directors ,
CEOs ,
CFOs ,
Corporate Dissolution ,
Deficiency Notices ,
Embezzlement ,
IRS ,
K-1 ,
Misappropriation ,
S-Corporation ,
Settlement Agreements ,
Shareholder Distributions ,
Shareholders ,
State Courts ,
Stock Transfer ,
Tax Returns ,
Taxable Income ,
Whistleblowers
In less than four months, the citizens of the United States will be electing their next President to a four-year term. They will also be deciding which of the two major political parties will “control” the Senate, the House,...more
7/11/2024
/ Apportionment ,
C-Corporation ,
Conservatives ,
Controlled Foreign Corporations ,
Foreign Corporations ,
IRS ,
Moore v US ,
Partnerships ,
Pass-Through Entities ,
Presidential Elections ,
Repatriation ,
S-Corporation ,
SCOTUS ,
Shareholders ,
Sixteenth Amendment ,
Tax Cuts and Jobs Act ,
Tax Deferral ,
Tax Liability ,
Term Limits
You may have heard or even read about the U.S. Supreme Court’s recent decision regarding the date of death value of a deceased shareholder’s shares in a closely held corporation that owned a life insurance policy on the...more
7/1/2024
/ Business Succession ,
Buy-Sell Agreements ,
Buyouts ,
Certiorari ,
Closely Held Businesses ,
Connelly v United States ,
Estate Tax ,
Fair Market Value ,
IRS ,
Liability ,
Life Insurance ,
Liquidity ,
Redemption Agreement ,
Right of Redemption ,
SCOTUS ,
Shareholders ,
Tax Audits
It is a basic principle of the income tax that the gain or loss realized by a taxpayer from the conversion of property into cash, or from the exchange of property for other property that differs materially in kind from the...more
6/11/2024
/ Beneficiaries ,
Capital Gains ,
Corporate Restructuring ,
Equity Investors ,
Income Taxes ,
Internal Revenue Code (IRC) ,
IRS ,
Like Kind Exchanges ,
Limited Liability Company (LLC) ,
Liquidation ,
Partnerships ,
Property ,
Reorganizations ,
Shareholders ,
Tenancy-in-Common ,
Transfer of Assets ,
Trustees ,
Trusts ,
Wills
Last week, Sen. Warren reintroduced her “Ultra-Millionaires” wealth tax proposal to the Senate. Query her timing. The measure has the proverbial snowball’s chance in Hell of being enacted by this Congress.Perhaps the Senator...more
3/26/2024
/ Biden Administration ,
Business Entities ,
Business Income ,
Business Losses ,
Capital Gains ,
Closely Held Businesses ,
Corporate Taxes ,
Federal Budget ,
Federal Taxes ,
Income Taxes ,
Investment ,
Limited Liability Company (LLC) ,
Medicare Taxes ,
NIIT ,
Partnerships ,
S-Corporation ,
Self-Employment Tax ,
Shareholders ,
Tax Deductions ,
Tax Rates ,
Taxable Income ,
U.S. Treasury ,
Wealth Tax
It is not uncommon, in the context of a business entity in which a family owns a controlling or substantial interest, for an adviser to encounter intersecting gift and income tax issues.
This week’s post will consider one...more
Would you be surprised to learn that most shareholders of closely held corporations, and especially those with minority or merely passive interests, believe they cannot be held responsible for the tax obligations of their...more
2/15/2024
/ Closely Held Businesses ,
Corporate Taxes ,
Internal Revenue Code (IRC) ,
IRS ,
Limited Liability ,
Liquidation ,
Securities ,
Shareholders ,
Stock Purchase Agreement ,
Stock Sale Agreements ,
Stock Transfer ,
Tax Court ,
Tax Liability ,
Tax Shelters ,
Transferees
Many of us have encountered variations of the following scenario: a parent owns and operates a business; one or more of their children are employed in the business; as the children mature and become more experienced and...more
2/9/2024
/ Asset Purchase Agreements ,
Business Assets ,
Business Succession ,
Closely Held Businesses ,
Family Businesses ,
Gift Tax ,
Grantors ,
IRS ,
Limited Liability Company (LLC) ,
Non-Compete Agreements ,
S-Corporation ,
Shareholders ,
Stocks ,
Succession Planning ,
Tax Court
Uncertain Future-
The Congressional Budget Office (“CBO”) recently released some data for the federal government’s 2023 fiscal year. According to the CBO, the federal budget deficit for the year was $1.7 trillion, or...more
10/23/2023
/ Allocation of Funds ,
Bankruptcy Code ,
Bankruptcy Court ,
C-Corporation ,
Chapter 11 ,
Commercial Bankruptcy ,
Congressional Budget Office ,
Debtors ,
Double Taxation ,
Federal Debt Collection ,
Interest Rates ,
Lenders ,
Net Operating Losses ,
Price Inflation ,
Pro Rata Allocation Rule ,
S-Corporation ,
Sale of Assets ,
Shareholders ,
Tax Liability ,
Taxable Income ,
Unsecured Debt
Many of you, perhaps most, may have read about a case that will be heard by the U.S. Supreme Court during its current term. The case, Moore v. United States, comes out of the Ninth Circuit Court of Appeals. The Supreme Court...more
10/13/2023
/ Amicus Briefs ,
Apportionment ,
Certiorari ,
Controlled Foreign Corporations ,
Duties ,
Equitable Distribution ,
Foreign Corporations ,
Foreign Investment ,
Foreign Partner ,
Income Taxes ,
Internal Revenue Code (IRC) ,
Net Investment Income ,
Pass-Through Entities ,
Reinvestment Funds ,
SCOTUS ,
Shareholders ,
Sixteenth Amendment ,
Subpart F ,
Tax Cuts and Jobs Act ,
Taxation ,
Ways and Means Committee
Since 1995 to the present, the LLC has emerged as the entity of choice for the vast majority of entrepreneurs. This form of business entity owes its success to the flexibility and to the tax benefits that it affords its...more
9/22/2023
/ Beneficiaries ,
C-Corporation ,
Capital Gains ,
Entrepreneurs ,
Federal Taxes ,
Limited Liability Company (LLC) ,
Net Operating Losses ,
Reasonable Compensation ,
S-Corporation ,
Shareholders ,
Small Business ,
Tax Liability ,
Trusts
Another Change-
Last week BDO confirmed that it was going to convert from an entity organized as a limited liability partnership under state law to one organized as a corporation.
With that, BDO became the latest in a...more
6/29/2023
/ Attestation Requirements ,
Audits ,
Business Income ,
Business Profits ,
Business Taxes ,
C-Corporation ,
Corporate Conversions ,
Corporate Taxes ,
CPAs ,
Distribution Rules ,
Dividends ,
Earnings Tax ,
Employment Tax ,
Federal Taxes ,
Industry Consolidation ,
Limited Liability Company (LLC) ,
Mergers ,
Partnerships ,
Pass-Through Entities ,
Reorganizations ,
Restructuring ,
Shareholders ,
State Taxes
Decisions-
It is often the case that the optimal form of legal entity through which a business should operate, at least for income tax purposes, will depend in part upon the stage of its life cycle in which the business...more
6/20/2023
/ Acquisitions ,
C-Corporation ,
Federal Taxes ,
Investors ,
Limited Liability Company (LLC) ,
Liquidation ,
Partnerships ,
Pass-Through Entities ,
Reinvestment Funds ,
Shareholders ,
State Taxes ,
Tax-Free Transfers ,
Taxable Income
The Key Person-
The closely held corporation is often a fragile creature. Too often, its continued success and well-being are overly dependent upon the continued involvement of one individual – namely, the founder and...more
11/3/2022
/ Closely Held Businesses ,
Estate Tax ,
Grantor Trusts ,
IRS ,
Marital Trusts ,
Revocable Trusts ,
S-Corporation ,
Shareholders ,
Successors ,
Surviving Spouse ,
Testamentary Trust ,
Trusts
At different times over the course of the last thirty days or so, I have seen reports describing various plans to increase income taxes and/or wealth taxes on the “rich” that have either been endorsed or proposed by the likes...more
10/26/2022
/ Board of Directors ,
China ,
General-Business ,
Governor Newsom ,
Income Taxes ,
IRS ,
Limited Liability Company (LLC) ,
S-Corporation ,
Shareholder Distributions ,
Shareholders ,
Wealth Tax
Constructive Transfers-
It is axiomatic that the tax treatment of interactions between a closely held business and its owners will generally be subject to heightened scrutiny by the IRS, and that the labels attached to such...more
9/27/2022
/ Business Expenses ,
Business Taxes ,
C-Corporation ,
Closely Held Businesses ,
Deductions ,
Investment ,
IRS ,
Parent Corporation ,
Personal Exemptions ,
S-Corporation ,
Shareholders ,
Tax Court ,
Tax Deductions
Sibling Rivalry-
You have probably encountered family-owned corporations in which the founder’s offspring are involved in the business to varying degrees. They may even own some equity, typically having received such equity...more
9/22/2022
/ Closely Held Businesses ,
Distribution Rules ,
Estate Planning ,
Fair Market Value ,
Family Businesses ,
IRS ,
Popular ,
Reorganizations ,
Shareholders ,
Succession Planning ,
Tax-Free Spin-Offs
Tax Alchemy?
How many of you remember Section 138509 of the Ways and Means Committee’s markup last September of what would have been the Build Back Better Act? (A moment of silence, please.) Allow me to jog your memory....more
7/26/2022
/ Capital Gains ,
Domestic Partnership ,
Fair Market Value ,
IRS ,
Like Kind Exchanges ,
Partnerships ,
Pass-Through Entities ,
Property Owners ,
S-Corporation ,
Shareholder Distributions ,
Shareholders ,
Stocks ,
Tax Deferral ,
Taxable Exchanges ,
Ways and Means Committee ,
Wealth Tax
Don’t Do It-
There are certain generally accepted “dos and don’ts” of which almost every investor is certainly aware. For example, do not put all your eggs in one basket; if an investment seems too good to be true, stay...more
5/31/2022
/ Capital Losses ,
Corporate Taxes ,
Debt ,
Estate Planning ,
Fair Market Value ,
Installment Agreements ,
Intangible Property ,
Investment ,
Investors ,
Limited Liability Company (LLC) ,
Liquidation ,
Partnerships ,
Related Parties ,
S-Corporation ,
Sale of Assets ,
Shareholders ,
Stocks ,
Tangible Property ,
Tax Liability
Limited Liability?
Many individual taxpayers who invest in a closely held business, including one organized as a corporation, fail to appreciate there are circumstances in which they may be held personally liable by a...more
5/10/2022
/ Audits ,
Closely Held Businesses ,
Corporate Taxes ,
Duty to Act ,
Financial Transaction Tax ,
Income Taxes ,
Information Document Requests ,
New York ,
Personal Liability ,
Sales Tax ,
Shareholders ,
Tax Appeals
An often-explored theme of this blog is the frequency with which similarly situated owners of similarly situated closely held business, facing a similar set of economic circumstances, and presented with a similar set of...more
5/3/2022
/ Appellate Courts ,
B Corporation ,
C-Corporation ,
Closely Held Businesses ,
Compensation ,
Dividends ,
Entrepreneurs ,
Management Fees ,
Reasonable Compensation ,
Shareholders ,
Stocks ,
Tax Court ,
Tax Deductions ,
Written Agreements
Withdrawing Value-
Any tax adviser who has represented closely held businesses and their owners long enough realizes there are certain recurring themes that transcend the otherwise unique characteristics of the industry of...more
3/21/2022
/ C-Corporation ,
Closely Held Businesses ,
Compensation ,
Corporate Taxes ,
Credit Cards ,
Dividends ,
IRS ,
Management Fees ,
Meal and Entertainment Expenditures ,
Personal Use ,
Shareholder Distributions ,
Shareholders ,
Tax Court ,
Tax Planning
Double Tax-
The shareholders of C corporations have long sought legitimate operational and transactional structures by which they may reduce the double tax hit that is realized when such a corporation distributes its...more
3/11/2022
/ Audits ,
Burden of Proof ,
C-Corporation ,
Closely Held Businesses ,
Corporate Bonuses ,
Corporate Net Income ,
Disguised Sales ,
Dividends ,
Income Taxes ,
IRS ,
Job Duties ,
Midsize and Large Business Loans ,
Multi-Factor Test ,
Purchase Price ,
Reasonable Compensation ,
Salary/Wage History ,
Sale of Assets ,
Shareholders ,
Tax Liability ,
Tax Returns
Timing-
I had planned to post this piece during the third week of December, a day or so after the exchange between Senator Manchin and the White House sealed the fate of the Build Back Better plan, at least in its current...more
1/4/2022
/ Business Assets ,
Closely Held Businesses ,
IRS ,
Limited Liability Company (LLC) ,
New York ,
Partnerships ,
Pass-Through Entities ,
Private Equity ,
QSub ,
Reorganizations ,
Revenue Procedures ,
S-Corporation ,
SALT ,
Shareholders ,
Tax Increases ,
Tax Liability ,
Transfer Taxes
Haste Makes Waste?
How many of you are suffering from Build Back Better Fatigue? Seriously, it’s a thing.
Sure, the House passed its version of the President’s tax and spending bill on November 19, and the Senate...more
12/9/2021
/ Beneficiaries ,
Business Ownership ,
C-Corporation ,
Capital Gains Tax ,
Closely Held Businesses ,
Good Faith ,
IRS ,
Reorganizations ,
Restructuring ,
S-Corporation ,
Sale of Assets ,
Shareholders ,
Target Company ,
Tax Increases ,
Trustees ,
Trusts ,
Ways and Means Committee