No, I don’t mean the yellow-brick road, or any train, or anything like that. I am referring, of course, to the Protecting Americans from Tax Hikes Act of 2015 (the “PATH” or the “Act”). The recently enacted legislation provides a number of tax benefits, a few of which will be of particular interest to
The Disgruntled Shareholder & “Breaking” the S Election, Part I
During the course of the year, we encounter a number of shareholder disputes. Sometimes we represent a minority shareholder; sometimes we represent the corporation or the majority shareholders. 
Regardless of who the players are, the resolution of the dispute will involve some economic deal. The economic deal, in turn, will depend in no small part
From “S” to “C” to “S,” or, “But I Was Already Taxed On That”
It is relatively easy for an S corporation to inadvertently lose its tax status. For example, a disgruntled shareholder may transfer all or a portion of his or her shares to a person that is not qualified to hold S corporation shares, such as a C corporation or a nonresident alien. Upon the occurrence of
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
Family Transfers, Part IV: Not Just Gifting
Our last post covered certain gifting techniques. Today, we will look at some non-gift approaches to transferring a parent’s interest in the family business to his or her children.
Sale
The most common means for transferring a business interest to someone is through a sale of the interest. Thus, it not unusual for a parent
Family Transfers, Part III: Choosing a Vehicle
“Blood may be thicker than water,” begins an advertisement in a recent edition of the NY Times Magazine, “but can it hold a business together?” The advertisement continues, “It’s a little-known fact that nearly 90% of U.S. businesses are family firms. All over America, people pour their heart and soul into building family companies.
Sale of Business Meets Investment Income Surtax
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