“For the want of a nail the shoe was lost,
For the want of a shoe the horse was lost,
For the want of a horse the rider was lost,
For the want of a rider the battle was lost,
For the want of a battle the kingdom was lost,
And all for the want
Happy Halloween: Partnership “Disguised Sales” (Get It?)
What Is It?
Assume that X and Y agree to the following: X will transfer ownership of Prop to Y, and Y will transfer cash to X.
What just happened? No, this is not a trick question. Obviously, X has sold Prop to Y. If the amount of cash that X receives is greater than
IRS to Taxpayer: “If You Mess With the Bull . . .”
Where Did I Leave That Asset?
Tell me this hasn’t happened to you. Individuals come together to start a business. One or more of them own an asset (for example, real estate) that is to be used in the business and that they intend to transfer to a newly-formed business entity as a capital contribution,
Acquisitive Deals, Capitalized Costs, and Termination Fees
“We Could Have Had it All”
ABC has been looking for someone special for a long time. Suitors have come and gone. Some have been better than others. Some were non-starters. Then ABC meets a person that may be “the one.” As it turns out, that person has also been looking for someone.
After getting
Electing Entity Classification? You May Not Have A Choice
Whose Tax Liability?
In order to properly assess and collect a tax, the IRS first needs to identify the taxpayer that is responsible for reporting the income, and for collecting and remitting the tax, at issue. This is not always a simple proposition. In the case of a business entity, it may depend, in part,
The IRS Takes The Offensive On Valuation Discounts: Part Three
Last week, we considered (i) the context in which the recently proposed regulations under Section 2704 of the Code would eventually be applied, (ii) the principles underlying Section 2704, (iii) the valuation of an interest in a closely-held business, generally, and (iv) the failed legislative efforts to address the issues covered by the proposed
The IRS Takes The Offensive On Valuation Discounts: Part Two
In yesterday’s post, we considered the context in which the recently proposed regulations under Section 2704 of the Code will eventually be applied. Today, we will discuss Section 2704 and the valuation of an interest in a closely-held business. We will also review the failed legislative efforts to address the issues covered by the
The IRS Takes The Offensive On Valuation Discounts: Part One
“The” Proposed Regulations
They were years in the making – proposed regulations that seek to address what the IRS believes are abuses in the valuation of family-owned business and investment entities. Based upon the volume of commentary generated in response to the proposed rules, it is clear that the IRS has struck the proverbial raw
Waiving Dividends in a Close Corporation
Why Waive A Dividend?
For the most part, the shareholders of closely-held corporations and their counterparts in the public realm are subject to the same set of federal income tax rules. However, there are situations within each of these two realms where unique policy or practical considerations dictate the application of different sets of rules.
Look! On the Balance Sheet! Is it Debt? Is it Equity? It’s . . . Anyone’s Guess!
Same Old Story
This probably sounds familiar: You are reviewing an already-filed tax return for a closely held business, and you see that the balance sheet reflects a liability that is identified as “loans from shareholders.” You ask to see the loan agreement or promissory note that memorializes the loan. “There aren’t any,” you are