The use of a commercial lease to rip off minority owners in a closely held business
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If you’ve worked with the owners of closely held businesses for even just a few years, you have realized they are only half joking when they complain about having the government as a partner. Consider how much federal, state,...more
On 11/4/24, the Internal Revenue Service issued a warning to taxpayers regarding the dangers of engaging with promoters of fraudulent tax schemes that involve donating ownership interests in closely held businesses, often...more
As we noted in our Fraud and Commercial Loan Transactions: Post-Judgment Legal Strategies Webinar, fraud in commercial loan transactions presents significant challenges for creditors seeking to recover funds. Once a judgment...more
Almost exactly one year ago, we wrote about the go-to line of New York case law for business divorce litigants hoping to secure injunctions: a substantial and ever growing body of authority holding that involuntary loss or...more
Today we’re going to talk about one of the more common ways that a majority owner can rip off minority owners in a closely held business. And that is by causing the company to enter into a lease with an affiliate of the...more
Recently, the U.S. Supreme Court ruled unanimously in Connelly v. United States, that the valuation of a decedent’s shares in a closely held corporation for federal estate tax purposes must include insurance proceeds received...more
Decisions, Decisions - The owners of a closely held U.S. business will have to make many difficult decisions during the life of the business. Among the earliest of these is the so-called choice of business entity, the...more
With the looming elections, tax planners have taken time to consider what the future of Estate and Gift Tax planning might be under the new Congress. Every new Congress considers changes to the Internal Revenue Code of 1986,...more
In Connelly vs. United States (602 U.S. 257, June 6, 2024), the Supreme Court unanimously ruled that in a redemption of a deceased shareholder’s shares of stock, the corporation’s fair market value should include the proceeds...more
Business divorces take place in all types of private companies, including those owned and operated by family members. But families that are willing to engage in thoughtful planning can head off some of the internal conflicts...more
A key benefit to families with taxable estates may be about to go away. The Tax Reform Act of 2017 incorporated numerous tax reductions into U.S. law, with one significantly increasing the ability of taxable estate owners to...more
In a case of first impression, the Land Court decided that shareholders of Massachusetts close corporations may acquire corporate real estate by adverse possession. In Szawlowski v. Szawlowski Realty, Inc., the Court...more
In the world of business divorce litigation, this summer saw everything but a slowdown. We witnessed (and blogged about) Justice Crane cap a long-running fair value proceeding with helpful guidance on appraisals and...more
Most closely held businesses, whether organized as a C or S corporation, LLC or partnership, have (or should have) a buy-sell agreement. A buy-sell agreement addresses what happens to an owner’s interest in the business when...more
Improperly structured buy-sell agreements for closely held businesses will lead to an unexpected increase in the estate tax imposed on the estate of the deceased owner. The Supreme Court decision emphasizes the need for a...more
On June 6, 2024, the Supreme Court of the United States issued a unanimous decision in Connelly v. United States and found that life-insurance proceeds payable to a closely held business for the purpose of funding a share...more
I have been a major fan of Afro-Cuban (Salsa) and Brazilian Bossa Nova music since high school. Most of you know by now that I grew up in the Panama Canal Zone. By the time I got to West Point in the summer of 1978, it was...more
On June 6, 2024, the Supreme Court held 9-to-0 in Connelly v. United States that company-owned life insurance increases the company’s fair market value for estate tax purposes, and the company’s obligation to redeem a...more
The Supreme Court’s recent decision in Thomas A. Connelly et al. v. United States has significant implications for certain closely held business owners. The decision is important especially for those with, or planning to buy,...more
Many closely held businesses have shareholder buy/sell redemption agreements. These agreements are critical to maintaining business continuity when a key shareholder exits the company. When the redemption agreement is...more
On June 6, 2024, the U.S. Supreme Court issued a unanimous decision in Connelly v. United States affecting the valuation of closely held businesses for estate tax purposes. The Court explained that, for purposes of federal...more
Business leaders are considering new AI tools that grow more sophisticated each day. For closely held businesses on the lookout for innovative and tech-enabled cost savings, AI can offer a competitive edge by taking on...more
Connelly v. Internal Revenue Service is a landmark SCOTUS decision that will impact business owners, partners, shareholders, members, and professional practitioners from a business perspective, succession planning, as well as...more
On June 6, 2024, the U.S. Supreme Court issued a pivotal decision in Connelly v. United States, affecting how life insurance proceeds are treated in buy-sell agreements for closely held corporations. The ruling states that...more
On June 6, 2024 the Supreme Court unanimously ruled that life insurance proceeds should be included in the fair market valuation of a corporation for federal estate tax purposes. In Connelly v. United States, the Supreme...more