I’ll take My Chances If I had a dollar for every time a client said to me “but they never audit real property transfer tax returns,” I’d be a client myself. I often hear this statement in the context of a transaction that a client insists should not be subject to the transfer tax, and it is often made in response to my analysis that the hoped-for result would not stand up to scrutiny.
Continue Reading Taxable? How Will They Know?
Options That Fail 409A? It’s Easy to Do. – Part II
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
Options That Fail 409A? It’s Easy To Do. – Part I
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
Business Expense? You Need a Business First.
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
Deciding your own salary? Time for a reasonableness check.
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
Corporate Tax, Transferee Liability and … the Minority Shareholder? (Part 2 of 2)
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
Captive Insurance, Part II: Application
In yesterday’s post, we provided an overview of captive insurance entities. Today, we will consider the specific facts of two different so-called captives, and whether or not they qualified as such according to the Tax Court and the IRS, respectively.
The Captive Arrangement in the Tax Court
In Rent-a-Center v. Commissioner, the Court
Captive Insurance, Part I: An Overview
The IRS recently considered whether an arrangement between members of a corporate group and its affiliated insurance company, involving foreign currency fluctuations, constituted insurance for Federal tax purposes. For reasons that we will describe, the IRS concluded that the arrangement did not constitute insurance. 
Before getting into the details of the IRS’s holding, however,
Deal Economics: Contingent Purchase Price & Imputed Interest
Deferred Payments
It goes without saying that when a taxpayer disposes of property in a taxable sale or exchange, the gain realized on the sale will be subject to tax. Depending upon the nature of the asset disposed of, the gain may be taxable at ordinary or at capital gain rates.
It is also generally
Responsible Persons & Sales Tax Issues: Part III
In our last two posts, we described the concept of the “responsible person” under NY’s sales tax law, and how such an individual may become personally liable for the unpaid sales tax of a business. We also explored the factors that are considered in determining one’s status as a responsible person, as well as some