Today’s post briefly explores whether the term “corporate charity” is an oxymoron. It also tries to provide a framework for evaluating whether certain “charitable” activities should be undertaken by a business corporation. It is predicated, in no small part, upon the general premise that one must appeal to the corporation’s self-interest[i] in order to
business purpose
You Can Spin It Off or Split It Up, But Keep It Active
By Farrell Fritz P.C. on
Posted in Federal
A couple of months back, a local business reporter asked whether I could identify one kind of corporate transaction that was occupying more of my time than any other. When I asked whether they were referring to any specific industry, form of M&A transaction,[i] or type of buyer,[ii] they replied that they were…
I Own the Business, The Business Owns the Assets, I Own the Assets, Right?
By Farrell Fritz P.C. on
Posted in Federal
Personal Use of Business Assets
“But it’s my business. I own it.”
How many times have you heard this response from the owners of a business entity after you’ve advised them that they should not treat the entity as their personal bank account?
Too often, I’d wager.
What’s more, the response is not limited to…
Tax-Free Spin-Off? That May Depend . . . On Post-Spin-Off Events
By Farrell Fritz P.C. on
Posted in Federal
The Break-Up
After a tense period of disagreement and stalemate, the threat of litigation,[i] the ensuing economic and emotional stress, Client and their former fellow-shareholder (“Departing”) – and onetime friend, before their disagreement on the direction of the business turned into much worse – have gone their separate ways. The corporation (“Corp”)[ii] through…
“Business Purpose” and Dividing the Family Corporation: Think Before You Let it Rip
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Sibling Rivalry
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, typically having received them as gifts from their parents.[i] These situations may develop in such a way that they present difficult succession planning considerations for…
Shifting Business Activities Between Related Entities?
By Farrell Fritz P.C. on
Posted in Federal Tax Issues
Metamorphosis [i]
By now, most readers have heard about the benefits and pitfalls of “checking the box” or of failing to do so. Of course, I am referring to the election afforded certain unincorporated business entities to change their status for tax purposes. Thus, for example, an LLC with one or more members – which…