The Benefit of Knowing

Monday morning quarterbacking – the connotations are anything but positive.

Life is full of instances in which someone, in possession of all the factors that informed – or that should have informed, had they known about them – another’s earlier decision, and with full knowledge of the outcome of such decision,

Beyond Income Tax

Over the last several weeks, we have explored various aspects of the choice of entity dilemma that confronts the owners of many closely held businesses, and we have considered how the Tax Cuts and Jobs Act[i] may influence their decision.

In the process, you may have realized that one form of

Missed Part I?  Check it out here!

“Related Party” Transactions
Transfer Pricing

Valuations figure prominently in determining the proper tax treatment of transactions – such as sales, loans, leases, and performance of services – between related taxpayers, including, for example, commonly-controlled business entities.

The IRS is authorized to allocate items of income or deduction, or

One word: “taxes.” There are so many transactions in which the tax consequences visited upon a closely-held business and its owners, and, therefore the true economic cost of the transaction, will depend upon the valuation of the business, its property, or its equity.

The following discussion highlights some of the more commonly-encountered situations in which

Appraisal
Is it an art or a science? Is it equal parts of art and science? Is one part weighted more than the other? Do the answers to these questions depend upon the purpose for which the appraisal is being sought? Do they depend upon who is asking the question?

Yes, no, maybe, sometimes.

Not

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.

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One of the thorniest issues faced by the executor of an estate holding an interest in a closely- held business is the valuation of that interest. As if the preparation of the estate tax return was not daunting enough, the executor also has to determine the fair market value of the business interest. Although the