• Posted on October 17, 2016

    STEVEN B. GORIN, JD The Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) was enacted on December 15, 2015. Extensive legislation, the PATH Act permanently reduced the built-in gains recognition period from 10 years to 5  years for C  corporations making an S  election. It also made permanent the exclusion of gain on the sale of certain C  corporation stock originally issued to the seller. This article discusses business restructuring in light of the PATH Act. First, the article considers the impact of the legislation on existing C corporations contemplating an S election. Second, the article examines […]

  • Posted on July 20, 2016

    This is a complex issue, but here are the main things you need to know: 1.  IRS filing statistics suggest that about 70 percent of all LLCs are single-member LLCs whose members are individuals; only five percent have three or more members; and the remaining 25 percent are two-member LLCs. Thus, LLC practice for multi-member LLCs is almost entirely for two-member LLCs. 2.  Sound operating agreements for two member LLCs should address the roughly 25 main legal and tax issues that should be addressed in the operating agreements of all multi-member LLCs. However, in my experience, the members of most two-member LLCs […]

  • Posted on June 20, 2016

    The buy-sell agreement arguably is the most important legal agreement for closely-held entitles.  Whether you are the client’s business attorney or the estate planning attorney advising the owner of a small business, understanding what can go wrong with buy-sell agreements will help you better serve your clients. FAILURE TO COORDINATE Many times, business owners think seriously about buy-sell agreements only after they’ve already entered into other agreements that can impact the effectiveness of the buy-sell.  Examples include articles of incorporation/organization or partnership agreement, bylaws/operating agreements, loans or security agreements, franchise agreements and leases.  Buy-sell agreements must be coordinated with these […]

  • Posted on June 13, 2016

    By: Jim Kendall For the next few paragraphs, let’s assume you own the business — lock, stock and barrel, the whole kit and caboodle. That makes you eligible to answer a question not that many advisers ask, a question even fewer business owners can answer: Who’s your Right Who? The answer has nothing to do with Dr. Seuss. Instead, according to Aaron Ruswick, identifying the Right Who can greatly impact the value of your business — particularly when you reach, or near, the end of the road. Ruswick is a partner at the Wheaton law firm of Huck Bouma PC, where his […]

  • Posted on April 18, 2016

    In Part I, some of the history and issues surrounding series LLCs and their application were discussed; in Part II, we will investigate more recent developments, including a look at the status of the Uniform Protected Series Act  currently under consideration by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”). Which States Have Authorized Series LLCs?   Presently, there are 15 states with series LLC legislation: Alabama, Delaware, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Nevada, Oklahoma, Tennessee, Texas, Utah and Wisconsin.  The District of Columbia and Puerto Rico also have provisions for series LLCs. California does not authorize series LLCs, but permits series LLCs formed elsewhere to register […]

  • Posted on April 18, 2016

    As discussed in the first part of this series, C corporations are tax-inefficient forms of business.  C corporation income is taxed twice—once when it is earned, and again when it is distributed to the shareholders. To avoid this double taxation, most newly formed businesses use pass-through entities like S corporations or limited liability companies (LLCs) to own real estate. But a few decades ago, S corporation requirements were more onerous and LLCs didn’t exist.  Because of this, and for other reasons, many C corporations still own real estate. Part I of this series discussed two strategies to get real estate […]

  • Posted on January 25, 2016

    Corporations are taxed under subchapter C of the Internal Revenue Code unless the shareholders elect to be taxed under subchapter S.  Of these two tax regimes, subchapter C is more onerous.  It taxes all income twice: once when it is earned and again when it is distributed to shareholders.  If a corporation taxed under subchapter C (C corporation) sells appreciated property, the corporation must pay income tax on the difference between the amount received and the corporation’s tax basis in the property.  When the sales proceeds are distributed to the shareholders as dividends, the shareholders must pay income tax on […]

  • Posted on January 25, 2016

    While series LLCs have gained in popularity and use among states that have authorized them, the lack of state uniformity in the treatment and acceptance of series LLCs has led more conservative attorneys, advisors and clients to avoid them, believing that the uncertainties and potential risks outweigh the perceived benefits. In the last year, however, the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) has been hard at work and there are encouraging signs that a uniform law for series LLCs may be forthcoming. In Part I of this two-part series, we’ll cover some of the background and issues surrounding series LLCs. In Part II, […]

  • Posted on July 9, 2015

    Storing data ‘in the cloud’ is not a new concept; it has become a fact of corporate life. We now, however, have a contemporary, terse way of referring to the off-site storage of accessible data via the Internet— essentially, ‘Cloud’ computing. Over time, cloud computing may very well become ubiquitous and unavoidable. But what are the risks associated with cloud computing, and how can you minimize that risk? Cloud Storage Services (CSS) are a great way to access work-related data both at home and while on the road. CSS also makes it possible to collaborate with co-workers, especially those who work […]

  • Posted on July 6, 2015

    By: Lawrence J. Gregory A compelling reason for a business to operate as an S-corp. is the beneficial income tax treatment afforded to its owner/directors. Generally speaking, net income from a partnership (or LLC taxed as a partnership) will be subject to the self-employment tax on the owner’s income tax return, while the net income of an S-Corp will not. However, to combat potential abuses by the owner to escape all employment taxes, the IRS requires that owners who work for the S-Corp. pay themselves a “reasonable salary”. What constitutes reasonable is a very fact specific inquiry, and the IRS […]