It is not unusual for a closely-held business or for its owners to issue or transfer equity in the business to a third party in order to raise necessary funding for the business or to secure the services of someone with a certain expertise. In most cases, where the equity transfer is made by the
Oh No! Valuation Discounts Under Siege?
Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, “biblical”?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the…
Taxable? How Will They Know?
I’ll take My Chances If I had a dollar for every time a client said to me “but they never audit real property transfer tax returns,” I’d be a client myself. I often hear this statement in the context of a transaction that a client insists should not be subject to the transfer tax, and it is often made in response to my analysis that the hoped-for result would not stand up to scrutiny. …
Continue Reading Taxable? How Will They Know?
Selling a Family Asset: It Makes Business Sense– Will the IRS Care?
Here We Go Again
It is a common theme of these posts that a transaction has to make sense from a business perspective, that it should not be undertaken primarily for tax purposes, and that the goal of tax planning should be to maximize the economic benefit of the transaction by reducing the resulting tax…
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 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.
Why are taxes so important…
“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…
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…