In our last post, we described the concept of the “responsible person” under NY’s sales tax law, and how such an individual may become personally liable for the unpaid sales tax of a business. Today we will explore the factors that are considered in determining one’s status as a responsible person, as well as
Responsible Persons & Sales Tax Issues: Part I
Introduction
Many taxpayers fail to appreciate that any officer, director or employee of a corporation, and any employee or manager of a partnership or LLC, who has a duty to act for such entity in complying with any requirements of the sales tax law, may be held personally liable for the sales tax collected or
The Burden of Responsibility
It’s great to be the chief executive of a business that is doing well. You are likely being paid well, in some combination of salary, bonus and distributions, you enjoy the many other perks that are attendant to the position, and, of course, there is the prestige that goes along with the job.
Unfortunately, a
Corporate Events as Indirect Gifts
Last month we considered a situation in which the recapitalization of the equity in a family-controlled business resulted in a taxable gift. Today we will consider how a family-owned corporation’s redemption of shares from a parent-shareholder may be treated as a taxable gift from the parent, and may result in some unexpected consequences for the
Post-Acquisition Tailoring
In most acquisition transactions, one company will purchase the assets of another company. An asset deal has the benefit of allowing the acquiring company to select only those assets or lines of business of the target company that it wants to acquire. It enables the acquirer to recover its purchase price through depreciation and amortization,
Selling Your Business? Careful of Employee Expectations.
Once Upon A Time . . .
a corporation, Corp, was founded. The year was 2006, and Employee immediately was hired as Corp’s chief technology officer and received restricted stock grants from Corp. As a “founder” of Corp, Employee initially owned 9.8% of Corp’s stock. However, each time investors infused capital into Corp, Employee’s interest
Removing A Minority Shareholder
During their life cycles, most closely held businesses will face the unpleasant task of dealing with a difficult, or otherwise unwanted, minority shareholder. Family-owned businesses as well those in which the owners are unrelated are likely to encounter this issue. At some point in its existence, the original owners of the business will: have a
Outside Basis: “But I Promised to Pay!”
A Common Fact Pattern
Partner One and Partner Two started LLC in 2002. LLC was treated as a partnership for tax purposes. They contributed a good deal of their savings and labor, but LLC lost money for the first several years of operation. Another partner, deep-pocketed Corporation, was willing to contribute almost one million dollars
Keeping It In the Family? Beware Accidental Gifts.
From a tax perspective, partnerships and limited liability companies are, by far, the most flexible of business vehicles. Among other benefits, they have no restrictions as to ownership or as to classes of equity; special allocations and disproportionate distributions may be provided for in the partnership or operating agreement; and there is pass-through tax treatment.
Keeping It Real, Especially In A Family Business
A taxpayer has the legal right to minimize his or her taxes, or to avoid them completely, by any means that the law allows. However, this right does not give the taxpayer the right to structure his or her affairs by using “business entities” that have no economic reality and that are employed only to