“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.
House Ways & Means Committee Makes a BIG Move
We have previously looked at the recognition period for built-in gains of S corporations, and the effect of the expiration of the temporary reduction of this period, under the American Taxpayer Relief Act of 2012, to five years. Earlier this week, however, the 
House Ways and Means Committee approved six “tax extender” bills to
S Corps: Not Gone Yet
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
Spin-Offs, Split-Offs and Split-Ups: No IRS Ruling? No Problem.
In an earlier post, we discussed the issue of splitting up the family-owned corporation, on a tax-free basis, so as to enable siblings to go their separate ways.
PLR 117674-13
A recent IRS ruling considered the following situation: an S corporation (“Distributing”) had four equal shareholders, each of whom wanted to independently own and
Need Capital? Closely Held?
A rapidly growing, closely-held business may find itself in need of additional capital. When the owners of such a business do not have the liquidity or disposable assets from which to provide such capital, and with traditional lenders often unwilling to extend the necessary credit on acceptable terms, many close businesses have turned to private
“Wandry”ing About Defined Value Clauses?
Taxpayers sometimes employ a so-called “defined value clause” (“DVC”) in connection with a gift of property that is difficult to value, such as an equity interest in a closely-held business. In the case of such a gift, the value of the business interest – the amount of the gift – is never really “established” for
Recapitalize With Care! (The IRS is Watching)
A recapitalization is an exchange between one corporation and its shareholders or security shareholders. It has been described as a “reshuffling of a capital structure within the framework of an existing corporation,” and it is one of the most common forms of reorganization encountered in the case of a closely-held business. Simple examples include the
Sales Tax in M&A, Part III: The Income Tax Impact of Sales Tax
We noted earlier that sales tax is often viewed as a “sideshow” to income tax considerations in structuring a deal. Regardless, it represents real economic cost to the payor. To appreciate its “true” cost, however, one must also consider its income tax consequences.
In the case of the seller or transferor who pays the tax,
Sales Tax in M&A, Part II: Bulk Sales
Overview
The buyer in a “bulk sale” transaction – i.e., the sale and purchase in bulk of the whole or part of the “business assets” of a person required to collect sales tax – must file a notice of bulk sale at least ten days before taking possession of such assets or paying for them
Rolling Over the Parent’s Equity
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