Underlying the corporate reorganization provisions of the Code is the principle that it would be inappropriate to tax a transaction as a result of which the participating taxpayers – the corporations and their shareholders – have not sufficiently changed the nature of their investment in the corporation’s assets or business, provided the transaction is motivated
Farrell Fritz P.C.
Proposed Changes to Transaction-Related 409A Compliance
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Deferred Compensation
It is not uncommon for a closely-held business to provide an economic incentive to its key employees. The incentive may take the form of compensation the payment of which is deferred until the compensation is “earned,” which may be upon the occurrence of some specified business-related event, such as the sale of the…
Heads I Win, Tails You Lose?
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
“You Made Your Bed, Now . . .”
It is a basic precept of the tax law that, for purposes of determining the tax consequences of a transaction, a taxpayer will generally be bound by the form of the transaction that the taxpayer has used to achieve a particular business goal.
The taxing authorities, however,…
Pigs Get Fat, Hogs Get Slaughtered
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Nothing Ventured…?
Ask any tax practitioner, “Have you ever advised a client not to do something, only to discover later that they did it anyway?” Or, have you ever reminded a client of the old adage, “if something sounds too good to be true, it probably isn’t?” The likely responses would be “Oh yeah.”
How…
What Is It Worth? It Depends
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Appraisal
Is it an art or a science? Is it equal parts of art and science? Is one part weighted more than the other? Do the answers to these questions depend upon the purpose for which the appraisal is being sought? Do they depend upon who is asking the question?
Yes, no, maybe, sometimes.
Not…
Exclusion of COD Income for the Developer – or Not?
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
COD & QRPBI
The discharge of indebtedness generally gives rise to gross income to the debtor-taxpayer. The law, however, provides several exceptions to this general rule. Among these exceptions are rules providing that income from the discharge of indebtedness of the taxpayer is excluded from income if the discharge occurs in a Title 11…
Like-Kind Exchanges, The “Productive Use in a Trade or Business” Requirement, and Related Party Transactions
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Come Fly With Me
What is a like-kind exchange? Many would respond that it is a transaction by which a company exchanges one real property that it has used in its trade business for another property that will also be used by the company in its trade or business.
Generally speaking, this response would be…
Owning Real Property: TIC or Partnership – Why Care?
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
What is It?
It is a frequently recurring issue for those who advise the owners of rental real property, but one that is rarely raised by the owners themselves: does the ownership arrangement constitute a partnership for income tax purposes?
The question appears to be fairly straightforward – just ask any client. “We haven’t executed…
A Taxpayer to New York: “Just when I thought I was out… [You Try to] pull me back in”
By Farrell Fritz P.C. on
Posted in State Tax Issues
One Day . . .
It is the dream of so many New York business owners: build a successful business, get your kids involved in the business, transition the operation, management and – eventually – the ownership of the business to the kids, move to Florida (or another warm, tax-friendly venue), successfully fend off New…
Compensation: Determining What is Reasonable – And Deductible
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
The clash between the form in which a corporate taxpayer casts a payment to a shareholder-employee, and the substance of such a payment, has been played out in the courts for as long as there has been a corporate income tax. The stakes involved can be significant. (See, e.g., A Story of Law Firm Compensation…