Farrell Fritz P.C.

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Taxpayers sometimes employ a so-called “defined value clause” (“DVC”) in connection with a gift of property that is difficult to value, such as an equity interest in a closely-held business.  In the case of such a gift, the value of the business interest – the amount of the gift – is never really “established” for…

A recapitalization is an exchange between one corporation and its shareholders or security shareholders.  It has been described as a “reshuffling of a capital structure within the framework of an existing corporation,”  and it is one of the most common forms of reorganization encountered in the case of a closely-held business.  Simple examples include the…

Overview

The buyer in a “bulk sale” transaction – i.e., the sale and purchase in bulk of the whole or part of the “business assets” of a person required to collect sales tax – must file a notice of bulk sale at least ten days before taking possession of such assets or paying for them…

In the recent case Thousand Oaks Residential Care Home I, Inc. v. Commissioner, the Tax Court considered whether a corporation’s compensation packages for its owner-employees were unreasonable and thus disallowable as deductions.  The facts can be summarized as follows: in 1973, Petitioners “Mr. and Mrs. F.” purchased a struggling corporation called Thousand Oaks Residential…

In the choice of entity debate, the ability to divide the corporation’s business assets and activities into two or more separate corporations, owned by different shareholders, without incurring taxable gain, is often said to be one of the more significant advantages enjoyed by the corporate form of business.  However, though the partnership provisions of the…

It is not unusual for a parent to have successfully started and grown a business, only to find that his children either have no interest in continuing the business or are incapable of doing so.  Prior to that moment of realization, however, Parent may have transferred equity in the business to his children, either as…

In the context of a family business, we are sometimes presented with situations in which the business wishes to sell property to, or acquire property from, a family member or an affiliated business in which he is involved. The transferors are often surprised by the tax consequences of these transactions.

Assume that Taxpayer owns land…

The withdrawal of a partner from a partnership is one of the most common business transactions. In some cases, the partner leaves amicably; in other cases, the departure may occur after many disagreements and, perhaps, litigation.  Regardless of the cause of the partner’s withdrawal, it is often the case that neither the partner nor the…