From a tax perspective, partnerships and limited liability companies are, by far, the most flexible of business vehicles. Among other benefits, they have no restrictions as to ownership or as to classes of equity; special allocations and disproportionate distributions may be provided for in the partnership or operating agreement; and there is pass-through tax treatment.
Arm’s Length Merger or Gift?
Every now and then, a case comes along that is just chock-full of lessons, not only for taxpayers, but for their advisors as well. The Tax Court’s decision in Cavallaro v. Comr
. describes such a case. It involves closely held corporations, related party transactions, a tax-free reorganization and, oh yeah, a huge taxable gift.
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.
Family Transfers, Part II: Gifts
In an earlier post, we noted that a parent who owns a business faces some difficult issues regarding the disposition of that business among his or her children. Among the options to be considered is a sale of the business, which would allow the parent to treat the children equally, inasmuch as each may
Make Sure to Have Some SCIN in the Game
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
Obama’s 2014 Budget Estate and Gift Tax Proposals: How Might They Impact Your Estate Plan?
As we reached the end of 2012 and the expiration (or so we thought) of the $5 million gift/estate tax exemption, many taxpayers scrambled to make gifts to, or for the benefit of, their family members. With these gifts, they sought to remove assets, and their appreciation, from the reach of the estate tax. 
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