Many of us have encountered variations of the following scenario:  a parent owns and operates a business; his kids are employed in the business; as the kids mature and become more comfortable and established in the business, some of them may want to assume greater managerial responsibility and to have a greater voice in the

“Blood may be thicker than water,” begins an advertisement in a recent edition of the NY Times Magazine, “but can it hold a business together?”   The advertisement continues, “It’s a little-known fact that nearly 90% of U.S. businesses are family firms. All over America, people pour their heart and soul into building family companies.

It has become relatively rare for an accountant or attorney to recommend the use of an S corporation for a newly-formed, closely held business.  Instead, the LLC, taxable as a partnership, has become the entity of choice for most start-ups, and for good reason: it is a flow-through entity for income tax purposes, and it

In the recent case Thousand Oaks Residential Care Home I, Inc. v. Commissioner, the Tax Court considered whether a corporation’s compensation packages for its owner-employees were unreasonable and thus disallowable as deductions.  The facts can be summarized as follows: in 1973, Petitioners “Mr. and Mrs. F.” purchased a struggling corporation called Thousand Oaks Residential

It is not unusual for a parent to have successfully started and grown a business, only to find that his children either have no interest in continuing the business or are incapable of doing so.  Prior to that moment of realization, however, Parent may have transferred equity in the business to his children, either as

The withdrawal of a partner from a partnership is one of the most common business transactions. In some cases, the partner leaves amicably; in other cases, the departure may occur after many disagreements and, perhaps, litigation.  Regardless of the cause of the partner’s withdrawal, it is often the case that neither the partner nor the