Business is back . . . Sort of

As the country begins its hoped-for recovery from the disruptive economic effects of the COVID-19 virus – or, more accurately, from the measures implemented by government to contain the spread of the virus – some closely held businesses will emerge relatively unscathed while others will not survive,

Close Corporations and Compensatory Grants of Equity

It should come as no surprise to readers of this blog that I am not enamored with the notion of issuing equity to employees of a closely-held business. It’s not that these individuals should not be rewarded for their efforts and contributions to the growth, success and stability

A law suit was recently filed against the U.S. in which the Taxpayers seek a refund of gifts taxes and interest that they claim were erroneously assessed against them by the IRS for their 2007, 2008 and 2009 tax years (the “Tax Years”).

Although it may be some time before the Taxpayers’ claims are resolved, the factual setting upon which the disputed taxes are based is a commonly recurring one.

It is also one that highlights the importance of recognizing the various contexts in which the equity interests in a closely-held business are valued, how they may impact one another, and the importance of being able to distinguish among them.

Family Transfers

Taxpayers are shareholders of Company, an S corporation, the shares of which (the “Shares”) are owned by members of the Taxpayer Family and certain key employees and directors of Company.

Continue Reading Fair Market Value? For What Purpose?

Nonqualified Deferred Compensation

In general, a nonqualified deferred compensation plan allows an executive to defer the “receipt” and income taxation of a portion of his compensation to a tax period after the period in which the compensation is earned (i.e., the time when the services giving rise to the compensation are performed). 

The payment of

“Call it what you want, incentives are what get people to work harder.”  — Nikita Kruschev

Most of our clients are closely held, often family-owned businesses.  The current owners may be the founders of the business, or they may be a generation or two removed.  Sometimes, the owners have children who are active in

A partnership is not subject to Federal income tax. Instead, an item of income or loss of the partnership retains its character and flows through to the partners, who must include such item on their tax returns. Generally, some partners receive partnership interests in exchange for contributions of cash and/or property, while others receive partnership

One of the issues most often encountered by the owner of a closely held business is succession planning.  This may be especially difficult where no member of the owner’s family is involved in the business.  In that case, the owner may have to consider the liquidation of his interest in the business, either by way

The grant of an equity interest by a partnership to one of its key employees should be approached with great caution because it may result in unintended tax consequences, both for the partnership and the partner.1

Many corporate employers use equity-based compensation in the form of stock or stock options to motivate their employees.