“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
Last week, we considered the proper tax treatment for a transfer of funds from a parent corporation to its foreign subsidiary. The parent had argued, unsuccessfully, that the transfer represented the payment of a deductible expense on the theory that the payment was made to enable the subsidiary to complete a project for
There is a problem that will sometimes plague the shareholders of an S corp that is going through challenging financial times. Whether because of a downturn in the general economy or in its industry, whether because of stiff competition or poor planning, the S corp is suffering operating losses. As if this
This week, we return to two recurring themes of this blog: (I) related party transactions – specifically, transactions between a taxpayer and a corporation controlled by the taxpayer; and (II) what happens when a taxpayer does not conduct the appropriate due diligence before engaging in a transaction.
Taxpayers owned two operating companies (the
Many years ago, Congress decided that taxpayers who were “related” to one another should be required to use the same accounting method with respect to transactions between them in order to prevent the allowance of a deduction to one party (using the accrual method of accounting) without the corresponding inclusion in income
In the course of valuing a target business, a potential buyer will want to develop an accurate picture of the target’s earnings and cash flow. In doing so, the buyer will try to normalize those earnings by “adding back” various target expenses that the buyer is unlikely to incur in the ordinary course of
A taxpayer must recognize the gain realized by the taxpayer from the conversion of a property into cash, or from the exchange of the property for other property differing materially in kind.
Under an exception to this general recognition rule, gain is not required to be recognized if property that is held