Faulty Framework?
The question posed above is not intended to be rhetorical. Rather, it is one that the owners of a closely held business should consider thoroughly before transferring or committing any business assets to a charitable organization.Continue Reading Should Closely Held Businesses Be Charitable?
Losses Weren’t Always Bad
Most tax advisers are aware that, prior to the Tax Reform Act of 1986 (the “TRA”),[i] the Code placed few limitations on the ability of an individual taxpayer to use deductions from a particular activity to offset income from other activities.Continue Reading Partnership Losses But No Outside Basis? Too Bad
What Was Intended?
Transactions between commonly controlled, closely held businesses are often conducted in an informal manner. This is unfortunate because, in the absence of documentation, it is sometimes difficult to discern the parties’ intent with respect to a transaction. This may be especially troublesome for the businesses and their owners where the transaction purports to create a debtor-creditor relationship.Continue Reading Debt or Equity? The Never-Ending Question For Closely Held Businesses
It’s Complicated
The Code includes a number of complex rules that are aimed at those overseas business and investment activities of U.S. taxpayers that Congress has determined may result in the improper deferral or avoidance of U.S. income tax.Continue Reading Enough Already – Eliminate Downward Attribution and Accidental CFCs
Independence
Earlier this week, the United States celebrated the 247th anniversary of its declaration of independence from the United Kingdom of Great Britain,[i] though the latter did not formally recognize the independence of its thirteen former colonies until the Revolutionary War ended, seven years later, with the signing of the Treaty of Paris on September 3, 1783.Continue Reading Thomas Paine and Today’s Tax Debates
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 growing list of highly regarded accounting firms to announce that it was going to change, or was considering a change in, its legal structure. Continue Reading Pre-Consolidation Conversions in the Accounting World – Tax Considerations
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[i] in which the business finds itself.
For example, a start-up that is expected to generate losses during its initial years of operation may want to pass those losses along to those of its owners who have made significant capital contributions to the business.Continue Reading Some Observations On Recent Conversions of Partnerships to “C” Corporations
One of the reasons often given for eliminating the estate tax is the substantial economic burden it places upon the estate of a deceased business owner and upon the business itself. Specifically, within nine months of the owner’s death, their estate is required to satisfy its federal estate tax liability, which is determined by applying a 40 percent tax rate to the date of death value of the decedent’s assets, including their interest in the business.[i]Continue Reading Corporate-Owned Life Insurance, a Redemption, and The Value of a Decedent’s Stock
Something’s Wrong
Of late, a not insignificant number of the business owners with whom I’ve been working have raised some concern over whether they are financially prepared for the next stage of their lives.Continue Reading Tax Planning for Business Owners Who Shortchange Themselves
The Supremes
The Constitution has figured prominently in the news of late. In the days preceding the initial discussions among members of the Administration and the Congressional leadership regarding the debt ceiling, several prominent Democrats stated that the President has the authority under the 14th Amendment to the Constitution[i] to unilaterally raise the debt ceiling. Last Sunday, the President himself told reporters he believes he has this authority, though “he acknowledged potential legal challenges could still lead the nation to default if he went that route.”[ii]Continue Reading Supreme Court Upholds IRS Collections Summons Without Notice