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News, Articles & Resources

Category: Business Transactions

U.S. Supreme Court Agrees to Decide Valuation Dispute Involving “Buy-Sell” Agreements

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Shareholder “Buy-Sell” Agreements (or similar terms contained in the Operating Agreement of an LLC or Partnership Agreement) are a common key element of the business plan for owners of closely held entities.  These agreements generally restrict transfer of interest outside of a close group and are often used as part…

SBA Provides Small Business Guidance

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The U.S. Small Business Administration has issued initial guidance regarding the Paycheck Protection Program (the “PPP”), a keystone of the legislative response to the Coronavirus (COVID-19) pandemic. The PPP provides loans designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA will…

Interest Expense No Longer Characterized As Investment Interest

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The Tax Court, in the case of William C. Lipnick v. Commissioner, No. 1262-18, 153 T.C. No. 1 (2019), addressed the treatment of interest expense that was initially related to a debt-financed distribution. William Lipnick, the taypayer in the case, received interests in a partnership by gift and bequest from…

S Corporation Shareholder Denied $8,000,000 Loss Deduction Due to Poor Structure of Loan

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An S corporation does not pay federal income taxes.  Instead, its income or losses pass through to its shareholders, and they report the income or loss on their federal individual income tax returns.  A shareholder can deduct losses, but only up to the adjusted basis of the shareholder’s stock and…

Is My Client’s Small Business Subject to the Business Interest Expense Limitation?

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Beginning in 2018 the federal income tax deduction of business interest can be limited. The law provides a “small business” exception to this limitation.  However, businesses conducted in multiple related entities must be combined when determining if the small business exception applies. The limitation on business interest expense was originally…

Can a Partner/LLC Member be Treated as an Employee?

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We are often asked whether an LLC, which is treated as a partnership for income tax purposes, can pay a member as an employee on a W-2 rather than simply making gross distributions from which the member pays self-employment taxes and makes quarterly estimated payments for income taxes.  The short…

IRS Disagrees with Tax Court on Partner Excluding Debt Cancellation Income

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The IRS has recently announced a non-acquiescence in four Tax Court cases involving the cancellation of partnership indebtedness.  Generally, the discharge of indebtedness gives rise to gross income to the obligor.  However, Code Section 108 provides a number of exceptions.  Section 108(a)(1)(A) provides an exclusion if the cancellation of indebtedness…

IRS Issues Relief from Repair Regulations and Form 3115 Filing Requirement for Small Taxpayers (Rev. Proc. 2015-20)

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On Friday, February 13, 2015, the IRS released an advance version of Rev. Proc. 2015-20, 2015-5 I.R.B. 450, that allows a “small business taxpayer” to make certain tangible property and dispositions changes in methods of accounting with an I.R.C. § 481(a) adjustment that takes into account only amounts paid or incurred,…

Bross Trucking Inc. v. Commissioner of Internal Revenue

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T.C. MEMO 2014-107 (2014). Bross Trucking is a fascinating case from an estate planning perspective because it presents facts that occur frequently in the representation of family businesses and the planning issues confronting the entrepreneur.  In estate planning for families, advisors often encounter circumstances where the family business is growing, either…

Uncertainty Still Looms – Tax Increase Prevention Act of 2014

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With only two weeks remaining in 2014, Congress did the expected and passed the Tax Increase Prevention Act of 2014 (TIPA), with President Obama signing the Act into law soon thereafter.  For the 2014 tax year, TIPA extends certain business and individual tax breaks, most commonly known as the “extenders.” For…

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