Business

It’s not enough for the founder of a closely held business to have successfully established the business. The business has to grow, not only to increase profits, but also to make it more competitive and to diversify its customer base. Such “smart” growth will attract talented employees to the business, facilitate borrowing, prepare the business to withstand economic downturns, and make it more attractive to potential buyers.Continue Reading Disclaiming to Save Taxes

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 28-percent larger than it was in 2022.[i]

The CBOs’ report attributed the increase to a combination of lower revenues and higher outlays. Can you guess which expenditure was among those most responsible for the increase? If you said payments of interest on the federal debt, you were right.Continue Reading Debtor Corp’s S Election: “Property” in Bankruptcy?

Ups and Downs

It’s wonderful to be part of a successful business, especially in a strong economy. The owners are probably enjoying a more than just decent return on their investment and, in most cases, are getting along well enough. The business’s employees feel secure in their position; hopefully, they also feel valued.

This rosy picture can change rather quickly, however, when the overall economy, or the industry in which the business operates, experiences a downturn.[i]Continue Reading The Trust Fund Penalty – Times May be Tough, But Don’t “Borrow” from Withheld Taxes

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