Earlier this year, the IRS issued Rev. Proc. 2013-30 to provide relief to corporations that have ceased to qualify as S corporations where the terminating event was not reasonably within the control of the corporation. In particular, the Rev. Proc. addresses late QSST and ESBT elections.
The issuance of the Rev. Proc., which consolidates various
Historically, the gift and estate tax laws have limited the ability of wealthy individuals to transfer their interests in family businesses to their children without suffering potentially severe tax consequences. However, many wealthy taxpayers are interested in shifting the appreciation in their business out of their estate and into the hands of their children.
Transfers
Revenue Ruling 2013-26 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates.
The rates are published monthly for purposes of sections 382, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.
Many of us encounter family-owned corporations in which the founder’s children are engaged in the business to varying degrees. They may even own shares in the corporation. These situations present difficult estate and succession planning considerations for the family and the business.
Scenarios
It may be that two siblings actively participate in the business. They
The grant of an equity interest by a partnership to one of its key employees should be approached with great caution because it may result in unintended tax consequences, both for the partnership and the partner.1
Many corporate employers use equity-based compensation in the form of stock or stock options to motivate their employees.
For many executives, the 2013 tax year began with an increase in the marginal federal income tax rate applicable to their compensation, from 35% to 39.6%. It also saw the expiration of the temporary payroll reduction for the employee’s share of OASDI, which consequently increased from 4.2% to 6.2%, plus an additional 0.9% increase
The owners of a business must consider many tax issues in connection with its sale. These include the structure of the transaction as a sale of assets or stock, the amount of gain arising from each structure, the character of the gain as ordinary or capital, and the resulting tax liability. From the foregoing, the
When a C corporation sells its assets, it recognizes gain equal to the excess of the amount realized on the sale (generally, the purchase price plus any liabilities assumed or taken subject to) over the adjusted basis of the assets being sold. This gain is subject to a corporate-level Federal income tax at a maximum
As kids playing ball, we learned about the “do-over” rule; following an unintended result at the plate, the player in question was allowed to try again, without penalty. As we got older and our games changed, we learned about “taking a mulligan”, again without penalty. It may not come as a surprise that a variation
Last year saw many taxpayers selling appreciated assets. The primary reason for this activity was the imminent increase, in 2013, of the long term capital gain rate, and the imposition (in some cases) of a 3.8% tax on net investment income, both of which would impact sales of assets owned directly by individuals or