News & Analysis as of

Closely Held Businesses

IRS and Treasury Department to Withdraw Proposed Tax Regulations Curbing Valuation Discounts

by Davis Wright Tremaine LLP on

In a positive development for closely-held business owners and their families, the Treasury Department recently recommended the complete withdrawal of its proposed tax regulations that would have severely limited the...more

IRS and Treasury Department Announce Withdrawal of Proposed 2704 Regulations

by Tucker Arensberg, P.C. on

On October 4, 2017, in its Second Report to the President Identifying and Reducing Tax Regulatory Burdens the U.S. Department of the Treasury announced that it is recommending the complete withdrawal of the proposed 2704...more

Succession Lessons from The Crown

Leadership transition from parent to child in a family-owned business is challenging. I noted a few factors in the successful, though difficult, transition portrayed in The Crown that may be helpful in your own “kingdom.”...more

Court Holds That Majority Shareholders In Closely Held Corporation Do Not Owe Fiduciary Duties To Minority Shareholders

by Winstead PC on

In Herring Bancorp, Inc. v. Mikkelsen, a corporation acquired a majority of the outstanding shares of preferred stock by “repurchasing” those shares in accordance with the articles of incorporation, including the shares owned...more

Definitions in Shareholder Agreements Matter When Transferring Family-Owned Business Stock

by Murtha Cullina on

Owners of family-owned corporations often enter into shareholder agreements that spell out whether and to whom corporate shares can be transferred. Frequently, these agreements provide for rights of first refusal by the other...more

Best in Law: It's a Family Affair! How to Avoid the Pitfalls - Six Legal Tips to Running a Family Business

by Best Best & Krieger LLP on

Many successful businesses are family-owned. There is an unmatched pride that comes from building a business that has the capability of being passed down through generations. Yet, a family business faces unique challenges....more

New Ideas for Old School Companies

by Davis Wright Tremaine LLP on

On June 1, 2017, Davis Wright Tremaine LLP hosted its 5th annual Farm to Label Summit, bringing together food and beverage industry leaders, investors, and entrepreneurs. The program included a series of interactive panel...more

Court Holds That Shareholders In Closely Held Business Do Not Owe Each Other Fiduciary Duties

by Winstead PC on

In In re Fritz, a bankruptcy court determined whether an exception to dischargeability was present. No. 15-347950BJH, 2017 Bankr. LEXIS 930 (N.D. Tex. Bankr. April 3, 2017)....more

Massachusetts SJC Sends Reminder of Fiduciary Duties in Closely-Held Corporations

by Murtha Cullina on

In a recent decision, the Massachusetts Supreme Judicial Court ruled that directors of a corporation owe a fiduciary duty to the corporation itself, and not to the stockholders of the corporation (as is the case in Delaware,...more

Trust But Verify Regarding Financial Information

Minority owners of closely-held corporations (in New Jersey) often put themselves in a position where they are cut off from access to the company’s books and records. When that happens, several things can occur, and few of...more

Pay Attention to Bylaws When Taking Corporate Actions

by Murtha Cullina on

All too often, family businesses are run in an “informal” fashion, with insufficient attention being paid to corporate formalities, including requirements set forth in a corporation’s bylaws. The Delaware Chancery Court...more

For closely held companies: Is there, or will there soon be, a significant lender in your life?

by Mintz Levin on

Ten considerations for closely held companies incurring debt in connection with minority investments by private equity sponsors, growth financing, or dividend recapitalizations....more

Failure To Return Shares Subject To Repurchase Right Supports Conversion Claim

by Allen Matkins on

Closely held issuers often include a repurchase right in their equity award agreements. I expect that in most cases, shareholders will comply with these provisions. When a shareholder doesn’t, the company’s most obvious...more

Corporate Formalities Matter in the Transfer of Shares of Family-Owned Businesses

by Murtha Cullina on

Shares in family-owned businesses are often transferred between family members, whether through a sale or gift during a shareholder’s lifetime or through inheritance after an owner’s death. The parties to such a transfer...more

[Webinar] FCPA Violations – Only a Risk For Big Companies? - April 25th, 1:00pm CST

by Robins Kaplan LLP on

Tuesday, April 25, 2017, 1:00 P.M. CST -- In November, J.P. Morgan paid $264 million to resolve FCPA offenses related to its “Sons and Daughters Program.” Could a small, entrepreneurial company find themselves in similar...more

Episode 8: Minority Oppression in the LLC: Interview With Professor Douglas Moll

by Farrell Fritz, P.C. on

The combination of majority rule and lack of exit rights leaves minority members of LLCs vulnerable to oppressive conduct by the majority, yet unlike legislation in most states giving dissolution and buy-out remedies to...more

Are you paying your children too much to work in the family business? The IRS might think so.

by Murtha Cullina on

A United States Tax Court recently issued a decision after trial that should serve as a reminder to management and controlling shareholders of family-owned businesses that salaries or other compensation paid to family-member...more

Avoiding the perils of joint investments in real property - A case study of Cheong Woon Weng v Cheong Kok Leong [2016] SGHC 263

by Dentons on

Often, joint investments in real property present potential pitfalls, especially if the parties are closely related to each other and dispense with the formalities of proper records, which may often be the case. In this...more

Do You Need to Do Business with Your Co-Owner’s Children? It Depends on the Language of Your Agreements.

by Murtha Cullina on

Owners of closely-held businesses, including family-owned companies, often agree to restrict the owners’ ability to later transfer their ownership interests to third parties. Such restrictions prevent one owner from selling...more

Reporting A Closely Held U.S. Corporation’s Overseas Activities

by Farrell Fritz, P.C. on

We have heard a lot about large, publicly-traded U.S. corporations that have parked trillions of dollars overseas to avoid the payment of U.S. income tax. We have heard how the tax system must be seriously broken to have so...more

Stretch out estate tax on business interests

Frequently, heirs of successful entrepreneurs are forced to sell off business interests at “fire sale” prices to help pay federal estate taxes. To alleviate the tax strain, Internal Revenue Code Section 6166 allows heirs to...more

Highlights from the 2017 Heckerling Institute on Estate Planning

by Thompson Coburn LLP on

Each January, the University of Miami hosts the Heckerling Institute on Estate Planning, the country’s largest estate planning seminar. During the seminar, reporters for the American Bar Association’s Real Property Trust &...more

CPAs: Top 10 list for fiduciary income tax returns and planning

by Thompson Coburn LLP on

As we near tax season, below are some tips for CPAs when planning and preparing tax returns for trusts, along with a link to an upcoming webinar on this very topic. ...more

Loans Between Related Entities

by Farrell Fritz, P.C. on

What Was Intended? Over the last thirty years, I have reviewed the income tax returns of many closely held corporations and partnerships. Quite often, on Schedule L (the balance sheet), I will see an entry for “other...more

Beware of Conflicting Interest Transactions in Family Business Management

by Murtha Cullina on

Directors of all corporations – including family owned businesses – owe a fiduciary duty of loyalty to the company. This duty requires a director to put the interests of the company ahead of his or her personal interest and...more

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