Legal Updates & Commentary for Tax & Estate Planning
Partnership Allocations
A few weeks back we discussed the allocation of a partnership’s income and losses among its partners. Specifically, we considered the requirement that an allocation to a partner must have substantial economic effect if it is to be respected by the IRS. The determination of whether an allocation has substantial economic effect for…
Be sure to start with Part I, here!
Real Estate as an Active Business
The active conduct of a trade or business does not include the holding for investment purposes of land, or other property, or the ownership and operation (including the leasing) of real property used in a trade or business, unless the…
Flexible Economic Arrangements
We represent a number of entrepreneurs. The form of business entity that they most often choose to operate is an LLC that is treated as a partnership for income tax purposes. They recognize that the LLC is not a taxable entity, that there are no limitations upon who may invest in an…
A Plethora of Partnerships
According to a recently released IRS analysis of tax return data, the number of partnerships and partners in the U.S. continues to increase, as do the total receipts and the value of total assets for all partnerships. LLCs classified as partnerships account for the majority of this growth.
These figures…
It is not unusual for a closely-held business or for its owners to issue or transfer equity in the business to a third party in order to raise necessary funding for the business or to secure the services of someone with a certain expertise. In most cases, where the equity transfer is made by the…
Why, Oh Why?
We’ve heard it before: “Why would you choose to operate as an S corporation?”
Underlying this question are a number of other business-related questions, among which are the following:
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Hail the Partnership! Don’t Abuse It.
Of all forms of business enterprise, the partnership (or an LLC treated as a partnership for tax purposes) is most often cited by tax practitioners as the most attractive vehicle for operating a business. Indeed, partnerships permit taxpayers to conduct joint business (including investment) activities through a very flexible…
It’s Not That Simple
The rules that govern the taxation of partners and partnerships are among the most complex in the Internal Revenue Code. This reflects, in part, the great flexibility that is afforded to partners in structuring their economic arrangements.
This complexity is often manifested in a difference of opinion between a taxpayer and…
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?
Part I of this post can be found here.
Potential Transferees
Now that the disgruntled shareholder has decided to transfer his or her shares to an ineligible shareholder, the transferee must be selected, as must the method of transfer.
This is a very critical point in the process because the shareholder must balance two competing…
