Legal Updates & Commentary for Tax & Estate Planning
In has been 192 days since the President declared a national emergency concerning the COVID-19 outbreak.[i] Across the country, businesses and communities were immediately placed on lockdown[ii] in order to contain the virus. Unfortunately, this response plunged us into an economic crisis that continues to plague us.
Congress responded relatively…
It may be the dream of every parent who owns a closely held business that one or more of their children will follow in their footsteps. They envision a time when a child will enter the business as an employee, learn the “ins and outs” of the business, pay their…
In light of all the attention given to the reams of regulations recently proposed under the Tax Cuts and Jobs Act (“TCJA”), some people may be joking that tax advisers must have stopped counseling clients on more “mundane” business matters in order to dedicate themselves to the new rules. If these jokesters…
Ask any shareholder of a closely held corporation whether they may be held liable for the tax obligations of the corporation, and they will likely respond “of course not, that’s why we established the corporation – to benefit from the limited liability protection it provides.”
Some of these shareholders will be surprised…
An often-explored theme of this blog is the frequency with which similarly situated business taxpayers, facing the same set of economic circumstances, and presented with the same set of choices, will knowingly repeat the “mistakes” made by countless taxpayers before them.[i] They will choose a course…
“Personal liability?!” the client screams. “For sales tax? How is that possible?” The look on their face is at once incredulous and accusatory. “Didn’t you say that the LLC would protect me and my assets from the liabilities of the business so long as we respected ‘corporate’ formalities, and treated the LLC as a…
Some shareholders are content with being wholly passive investors in a corporation. Others desire some degree of participation in the day-to-day management of the corporation’s business. Still others are willing to abstain from any involvement in the operation of the business, but insist upon having a say with respect to certain “significant” matters (so-called “sacred…
In general, the creditors of a corporation cannot recover the corporation’s debts from its shareholders—the shareholders enjoy the benefit of limited liability protection as a matter of state law. Among the corporate liabilities from which shareholders are usually shielded is the Federal income tax imposed on a corporation’s taxable income.
There are a number of exceptions to this general rule, however – some of which are better known than others – including the ones described below.
Continue Reading Shareholder Liability For Corporate Income Tax?
A couple of weeks ago, we considered a situation in which an unscrupulous partner (perhaps in cahoots with an IRS agent) tried to stick one of their partners with the federal employment taxes owed by their failing business. This week, we encounter a somewhat similar situation involving the imposition of personal liability on an innocent…
When a business is successful and there are profits to share, the owners of the business get along well enough. As revenues fall off, however, while costs often remain steady or even increase, the owners will sometimes choose to “defer” the payment of so-called “trust fund” taxes in order to satisfy…
