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.
Section 409A, Part I: What Is It?
Ask most closely-held business owners what words come to mind when they hear the names “Enron” and “Worldcom” and many would say things like “bankruptcy,” “failure,” “scandal” and “greed.” Ask those same business owners what impact those two names had on the ways they are able compensate their key employees and most would likely say
Deal Economics: The NY Real Estate Transfer Tax, Part II
In contrast to the sales tax, which does not apply to a sale of real property or to a sale of equity in a company, the real estate transfer tax does apply to the former and may apply to the latter. In the context of a deal, there may also be other situations in which
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
In Lieu of Litigation, A Painless Split-Up
In two earlier posts, we discussed how the division of a closely held, corporate-owned business may be effected on a tax-free basis. The IRS recently issued a ruling that illustrates the variety of circumstances in which such a division may be appropriate and feasible.
Distributing was an LLC that was treated as an S
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
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 I: The Economics of the Deal
Why are taxes so important to the sale of a closely-held business? Economics. Any deal, whether from the perspective of the seller or of the buyer, is about economics, and few items will impact the economics of a deal more immediately and certainly than taxes. The deal involves the receipt and transfer of value, with
Splitting Up The Family Partnership
In the choice of entity debate, the ability to divide the corporation’s business assets and activities into two or more separate corporations, owned by different shareholders, without incurring taxable gain, is often said to be one of the more significant advantages enjoyed by the corporate form of business. However, though the partnership provisions of the
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