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Posts Tagged ‘C Corporations’

Compensation to Law Firm Shareholder-Employees Disallowed by Tax Court

Published: March 17th, 2016

By: Stephen R. Looney

In Brinks,[1] the Tax Court once again applied the independent investor test to recharacterize compensation paid by a professional corporation, a law firm, to its shareholder-employees as nondeductible dividend distributions, and held the corporation liable for accuracy-related penalties for mischaracterizing the dividends as deductible compensation. This case should serve as a warning for many mid-size […]

Court Finds Shareholder Liable in Recent Midco Transaction

Published: January 15th, 2016

By: Stephen R. Looney

In Tricarichi,1 the Tax Court held that the sole shareholder of a corporation was liable as a transferee for the corporation’s unpaid tax liability after he sold his stock in a “Midco” transaction, resulting in a tax deficiency of $15,186,570 and penalties of $6,012,777 under Section 6901 and Ohio fraudulent transfer laws. The taxpayer was […]