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Reorganization Of Insolvent Corporations: Has A New Day Dawned? Nope

Withdrawal of Proposed Regulations- Earlier this year, the President directed the Secretary of the Treasury to review all “significant tax regulations” issued on or after January 1, 2016, and to take steps to alleviate the...more

Employee Loan Or Compensation?

Everyone recognizes the importance of debt financing to a business. The business needs liquidity to purchase or improve assets, or to pay expenses. It borrows the necessary funds from an institutional lender that requires...more

Sale Of A Contract: Capital Gain Or Ordinary Income?

Maximize Capital Gain- In the sale of a business, it is the goal of every business owner and his tax adviser to minimize the amount of gain realized and, to the extent gain is realized, to maximize the amount that is...more

“Abandonment Of A Partnership Interest,” Or “When A Taxpayer Rejects Its Tax Return Position”

“Disposing” of a Partnership Interest- If the amount realized by a taxpayer upon the sale of a partnership interest to a third party is insufficient to restore to the taxpayer his adjusted basis for the interest – i.e.,...more

Deducting Payments Between Related Parties

Potential for Abuse- Many years ago, Congress decided that taxpayers who were “related” to one another should be required to use the same accounting method with respect to transactions between them in order to prevent the...more

6/26/2017  /  ESOP , GAAP , Income Taxes , IRS , S-Corporation

Unreasonable Compensation & The Family Business

“Add-Backs”- In the course of valuing a target business, a potential buyer will want to develop an accurate picture of the target’s earnings and cash flow. In doing so, the buyer will try to normalize those earnings by...more

Self-Employment Tax, LLCs, & The “Limited Partner” Exclusion

In general, self-employed individuals are subject to employment taxes on their net earnings. The wages paid to individuals who are non-owner-employees of a business are also subject to employment taxes, regardless of how...more

“Tax-Free” Exchanges May Not Be Free of Tax

Business owners love to hear the words “tax-free” when considering the disposition of business assets. Unfortunately, many fail to grasp that a tax-free disposition is rarely free of tax in the sense of never being taxed;...more

Contributing Encumbered Assets: Partnership Disguised Sale Rules

Many of our posts this year have considered some of the unique issues that are presented by a partner’s contribution of property to a partnership, including the application of the “disguised sale” rules. Today, we will...more

Restricted Stock & Employee-Shareholders

Close Corporations and Compensatory Grants of Equity- It should come as no surprise to readers of this blog that I am not enamored with the notion of issuing equity to employees of a closely-held business. It’s not that...more

5/31/2017  /  ESOP , IRS , S-Corporation , Shareholders

Guidance For North-South Spinoffs

The IRS continues to issue guidance in the much debated area of corporate spinoffs. A recently published ruling examined the federal income tax treatment of the two steps that comprise a so-called “north-south” transaction.”...more

Why Care About Business Valuation? Part II

Valuations figure prominently in determining the proper tax treatment of transactions – such as sales, loans, leases, and performance of services – between related taxpayers, including, for example, commonly-controlled...more

Why Care About Business Valuation? Part I

One word: “taxes.” There are so many transactions in which the tax consequences visited upon a closely-held business and its owners, and, therefore the true economic cost of the transaction, will depend upon the valuation of...more

Paying The Estate Tax

An Unreasonable Burden? One of the reasons often given in support of the elimination of the estate tax is the economic burden it imposes upon the closely-held business; specifically, the requirement that the 40% federal...more

S-Corps, Basis & Loss Limitations

In General- It is a basic principle of federal tax law that a taxpayer cannot, for purposes of determining the taxpayer’s taxable income, claim a loss with respect to an investment in excess of the taxpayer’s unrecovered...more

Beyond Purchase Price: The Tax Treatment of M&A Deal Costs

Recovering Transaction Costs - It is a basic tax principle that the more a seller pays in taxes on the sale of its business, the lower will be the economic benefit realized on the sale; similarly, the more slowly that a...more

Foreign Investment in U.S. Real Property: Gift And Estate Tax Considerations

Last week, we reviewed the various U.S. federal income tax consequences that may be visited upon a foreign person who owns and operates U.S. real property (“USRP”). Today we will consider the U.S. federal gift and estate tax...more

Tax Considerations For The Closely-Held Foreign Investor In U.S. Real Property – Part II

Aside from planning for the taxation of U.S.-sourced rental income, the foreigner must plan for the disposition of the USRP pursuant to a sale. The taxation of gain realized by a foreigner on the sale of an interest in...more

Tax Considerations For The Closely-Held Foreign Investor In U.S. Real Property – Part I

Over the last few years, we have received an ever-increasing number of inquiries from “foreigners” who are interested in acquiring U.S. real property (“USRP”). Some of these foreigners – meaning closely-held business...more

Private Foundations: A Primer for the Business Owner

Many successful business owners attribute some part of their financial success to their community. The term “community” may have a different meaning from one business owner to another. In some cases, it may refer to the...more

An Overview Of The NYC Business Tax Environment

“If I can make it there, I’ll make it anywhere.” So begins one of the most iconic of musical tributes to New York City. It is sung at every Yankees game. It sums up the feelings of thousands of aspiring artists. As it turns,...more

A Buyer’s Guide to Acquiring Target’s Assets With A Stepped-Up Basis

The last few posts have focused upon the “tax-free” contribution of property to a partnership. Today, we’re “doing a 180,” as they say (whoever “they” are), and considering how the acquisition of assets may be structured so...more

Effecting Exchanges of Property Through a Partnership

In the last two posts, we saw how a Taxpayer who transfers Property A to a partnership (“Partnership”) in exchange for an equity interest therein will not be required to recognize the gain realized on the transfer. This gain...more

Protecting Tax Deferral for A Contribution to A Partnership

When a taxpayer (“Taxpayer”) sells a property (“Property”) with a fair market value (“FMV”) in excess of Taxpayer’s basis in Property in exchange for cash in an arm’s-length transaction, the amount of gain that he realizes on...more

When A “Tax Free” Exchange May Not Be Free of Tax

“Tax free” – two words that often bring great delight when they are spoken by a tax adviser to the owner of a business, whether he is considering the disposition of a single asset, or of substantially all of the assets, of...more

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