In a previous post, we noted that individual shareholders often seek to reduce the double income taxation (at both the corporate and shareholder levels) that accompanies a sale of assets by, and liquidation of, a C corporation by arguing that they own personal goodwill. By claiming goodwill as a business asset that is separate
Deal Economics: The NY Real Estate Transfer Tax, Part III
Income Tax Impact of Transfer Taxes
We noted earlier that state transfer taxes are often viewed as a “sideshow” to federal income tax considerations in structuring a deal. Despite this perception, state transfer taxes represent real economic cost to the payor. To appreciate their “true” cost, however, one must also consider their income tax consequences.
Deal Economics: The NY Real Estate Transfer Tax, Part II
In contrast to the sales tax, which does not apply to a sale of real property or to a sale of equity in a company, the real estate transfer tax does apply to the former and may apply to the latter. In the context of a deal, there may also be other situations in which
Deal Economics: The NY Real Estate Transfer Tax, Part I
In a prior post, we discussed the impact of the New York sales tax upon the economics and structure of a so-called “M&A” transaction. In this post, we will consider another transfer tax that is often encountered in an M&A deal: New York’s real estate transfer tax. 
Deal Economics
Why are taxes so important
S Corp. Trusts & the 3.8% Surtax on NII: Part IV
Planning for the Surtax
The best time to plan for any tax event is well before it occurs, and this also applies to the surtax. The trustee of a trust will almost always want the business income of the trust to be characterized as active income. The surtax may be addressed, at least partially, in
S. Corp. Trusts & the 3.8% Surtax on NII: Part III
The IRS’s Position on Material Participation by Trusts
According to the IRS, material participation for a non‑grantor trust should be determined solely by reference to the activities of the trustee acting as such; it should not include the trustee’s participation in any other capacity (e.g., as an employee of the corporation), nor should it consider
S Corp. Trusts & the 3.8% Surtax on NII: Part II
Material Participation by S Corp. Trusts
Since the enactment of the “material participation” test, as part of the passive activity loss (“PAL”) rules, in 1986, the IRS has issued very little guidance on how the test applies to trusts. Neither the Code nor the Regulations are helpful.
When the IRS issued proposed regulations for the
S Corp. Trusts & the 3.8% Surtax on NII: Part I
While the S corporation has a number of shortcomings, it historically has offered the best means for avoiding corporate level tax on the sale of business assets, provided the sale occurs beyond the corporation’s built-in gain recognition period. A recent development provides yet another advantage for an S corporation over a C corporation: an
In Lieu of Litigation, A Painless Split-Up
In two earlier posts, we discussed how the division of a closely held, corporate-owned business may be effected on a tax-free basis. The IRS recently issued a ruling that illustrates the variety of circumstances in which such a division may be appropriate and feasible.
Distributing was an LLC that was treated as an S
Receiving Services From Your Business
In our last post, we indicated that the business owner’s guiding principles in evaluating any transaction in which he or she may engage with the business should be the following:
– Would an unrelated third party have entered the transaction on comparable terms?
– Is the taxpayer’s behavior consistent with what one would expect