Why Speak to the Tax Adviser?
I don’t know about you, but most tax advisers hate surprises. I certainly do. Many taxpayers, on the other hand, seem to invite them. While I doubt that they look forward to being surprised, they often go into transactions without first looking into what the income tax consequences will
Yesterday we reviewed the IRS’s determination that a nonstatutory stock option (NSO) violated Section 409A. Today we will review the income tax consequences of such failure.
Income Inclusion under Section 409A
Section 409A provides that, if at any time during a taxable year a nonqualified deferred compensation plan fails to meet certain distribution-timing requirements, or
Incentive Compensation
It is not uncommon for a closely-held business to provide an economic incentive to its key employee. Often, the incentive takes the form of an annual cash bonus. Alternatively, the business may provide the key employee with a longer-term incentive, in the form of a deferred compensation arrangement that may be payable on
For most closely-held businesses, and especially for those that are newly-formed, the infusion of capital is of paramount concern because it may be needed to fund start-up costs, operations and, eventually, expansion. In some cases, the capital may be obtained from investors in exchange for an equity interest in the business; in others, the capital
Passive Activity Losses
The “passive loss rules” are aimed at preventing individual taxpayers from using their losses from passive activities to offset their income from active businesses. The rules operate by “disallowing” the current deduction of passive losses – the excess of an individual taxpayer’s losses from passive activities for the year over his or
Back to Basics
As we mark the “end” of the tax season (it never really ends), it may be helpful to remind folks that not every expense incurred by a business may be claimed as a deduction in determining the taxable income of the business.
While that may seem obvious, tax practitioners are forever encountering
Own your own business, decide your own salary… right?
Wrong.
The Tax Court recently upheld corporate tax deficiencies and accuracy-related penalties assessed by the IRS after it disallowed as a business expense deduction half of $2 million in bonuses paid by an eye care center (the “Center”) to its sole shareholder. The sole shareholder, who
Two of our recent posts considered the IRS’s recent successes in applying the transferee liability rule to collect the federal income tax liability owing by the corporation from the sale of its assets from a corporation’s shareholders. In both cases, the shareholders had employed sham transactions in an attempt to avoid the corporate tax liability.
Last week’s posts described a situation in which the IRS was able to collect a deficiency in corporate income tax from a minority shareholder of the taxpayer-corporation on the basis of transferee liability under state law. Recently, another decision addressed the question of transferee liability, this time in the instance of a dissolved corporation’s unpaid
See yesterday’s post for the background on the liability of the minority shareholders discussed today.
Transferee Liability
Taxpayers argued that the IRS’s installment agreement with Corp cut off their transferee liability, and that the IRS’s failure to exhaust its collection options against Corp precluded the IRS from seeking to recover from them as transferees. They