Business

Another Mess

Congress has only a few days to avert a “shutdown” of the federal government.[i]

It’s not looking good in the House, as Speaker McCarthy has struggled to bring certain members of the majority into line, while more moderate members of his party have displayed a willingness to reach across the aisle to secure a temporary funding bill.[ii]

Meanwhile, it seems that the members of the minority[iii] have been content to watch the GOP’s drama unfold.…

Continue Reading Open Transaction Treatment for The Liquidation of a Partner’s Interest

Toll the Bells

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 members.[i]

For example, there are no restrictions on (i) the ownership of equity in an LLC, (ii) the number of members it may have, and (iii) the varying classes of economic interests it may issue its members and its ability to specially allocate items of income, gain, loss and deduction.[ii] In addition, the LLC is treated as a pass-through for federal income tax purposes; it does not pay an entity-level tax on its taxable income – instead, such income is reported by and taxed to its members.[iii]…

Continue Reading ESBTs and the Carryover of S Corporation Losses

Approaching Year End

Which holiday do you dread the most? For me, it has always been, and likely will always be, Labor Day. Of course, with each passing year, anything that I describe as “always” is less meaningful than it was the year before, at least to the extent it relates to me. That said, there is something about entering the final “stretch” of the year that makes me more anxious than usual.  

After years of trying to determine the root cause of this condition, I recognized that it had nothing to do with the beginning of the school year, as I had initially surmised,[i] nor with the pressure to collect delinquent accounts before the year end,[ii] which I find to be the most unpleasant of responsibilities.[iii]…

Continue Reading Withholding Taxes: Deferred Comp and Services Overseas

NY’s Almost There

Back in June of this year, New York’s legislature passed a bill that, if enacted, would create the first state-level public database with information regarding the ownership of limited liability companies (LLCs).[i]

Beneficial owners are of interest to governments, including taxing authorities, because of their economic status as the persons who own or control a company that operates within the government’s or authority’s jurisdiction. …
Continue Reading Tax Compliance: Self-Assessment, Transparency, and Enforcement

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

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