Last week’s posts described a situation in which the IRS was able to collect a deficiency in corporate income tax from a minority shareholder of the taxpayer-corporation on the basis of transferee liability under state law. Recently, another decision addressed the question of transferee liability, this time in the instance of a dissolved corporation’s unpaid
Shareholder Buy-Outs In A Closely-Held Corp.: Part I
Every owner of a closely-held corporation has certain property rights, arising from his or her status as an owner, that have economic value to the owner. At the inception of the business, the owner may count among these rights the ability to share in the profits generated by the business, whether in the form of
Deal Economics: Contingent Purchase Price & Imputed Interest
Deferred Payments
It goes without saying that when a taxpayer disposes of property in a taxable sale or exchange, the gain realized on the sale will be subject to tax. Depending upon the nature of the asset disposed of, the gain may be taxable at ordinary or at capital gain rates.
It is also generally
Hot Partnership Assets & Installment Sales
Installment Reporting: Sale of Corporate Stock v. Sale of Partnership Interest
Most advisers understand that if a taxpayer sells his or her shares of stock in a corporation in exchange for a promissory note, the taxpayer generally can defer recognition of the gain realized on the sale until principal payments are received on the note
Post-Acquisition Tailoring
In most acquisition transactions, one company will purchase the assets of another company. An asset deal has the benefit of allowing the acquiring company to select only those assets or lines of business of the target company that it wants to acquire. It enables the acquirer to recover its purchase price through depreciation and amortization,
Selling Your Business? Careful of Employee Expectations.
Once Upon A Time . . .
a corporation, Corp, was founded. The year was 2006, and Employee immediately was hired as Corp’s chief technology officer and received restricted stock grants from Corp. As a “founder” of Corp, Employee initially owned 9.8% of Corp’s stock. However, each time investors infused capital into Corp, Employee’s interest
Arm’s Length Merger or Gift?
Every now and then, a case comes along that is just chock-full of lessons, not only for taxpayers, but for their advisors as well. The Tax Court’s decision in Cavallaro v. Comr
. describes such a case. It involves closely held corporations, related party transactions, a tax-free reorganization and, oh yeah, a huge taxable gift.
Personal Goodwill & Estate Valuation
In a previous post, we noted that individual shareholders often seek to reduce the double income taxation (at both the corporate and shareholder levels) that accompanies a sale of assets by, and liquidation of, a C corporation by arguing that they own personal goodwill. By claiming goodwill as a business asset that is separate
Deal Economics: The NY Real Estate Transfer Tax, Part III
Income Tax Impact of Transfer Taxes
We noted earlier that state transfer taxes are often viewed as a “sideshow” to federal income tax considerations in structuring a deal. Despite this perception, state transfer taxes represent real economic cost to the payor. To appreciate their “true” cost, however, one must also consider their income tax consequences.
Deal Economics: The NY Real Estate Transfer Tax, Part I
In a prior post, we discussed the impact of the New York sales tax upon the economics and structure of a so-called “M&A” transaction. In this post, we will consider another transfer tax that is often encountered in an M&A deal: New York’s real estate transfer tax. 
Deal Economics
Why are taxes so important