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Archive for the ‘Asset Sales and Purchases’ Category

Tax Court Finds Compensation Paid to Shareholder-Employees Reasonable

Published: July 28th, 2016

By: Stephen R. Looney

In Johnson, Inc.,[1] the Tax Court held that the amounts paid to the shareholder-employees of a C corporation constituted reasonable compensation deductible under Section 162 and that amounts paid by the taxpayer-corporation to an entity controlled by two of its shareholders was deductible as an ordinary and necessary business expense under Section 162. Facts of […]

COBRA Continuation Coverage in Merger & Acquisition Transactions

Published: June 13th, 2016

By: Christopher R. D’Amico

Generally, purchasers prefer to acquire businesses by purchasing the assets of the selling entity, rather than acquiring its stock. One of the advantages of an asset sale versus a stock sale is that the purchaser can avoid assuming most of the liabilities associated with the selling entity. However, many purchasers are unaware that they may […]

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 […]

Dean Mead Seminar on March 27th: “Will the Recent Tax Changes Have a Major Impact on Your Real Estate Investments?”

Published: March 11th, 2013

The recently enacted American Taxpayer Relief Act of 2012, together with the new 3.8% tax on investment income that was added to the Code as part of the Patient Protection and Affordable Care Act, but first became effective for tax years beginning in 2013, are likely to have a significant impact on real estate investments.  […]

Pass-Throughs Still the Preferred Choice of Entity in 2013 and Beyond

Published: January 16th, 2013

By: Christopher R. D’Amico

A number of commentators have suggested that since the maximum marginal individual federal income tax rate has risen to 39.6% and now exceeds the maximum marginal federal tax rate applicable to C Corporations of 35%, that it might be wise to convert pass-through entities (like partnerships, S Corporations and LLCs taxed as partnerships or S […]

New State Law on Transferee Liability Provides More Certainty

Published: May 18th, 2012

In the most recent legislative session, the Florida Legislature passed House Bill 103 (Chapter 2012-55, Laws of Florida), providing for new methods whereby a person acquiring a business may not assume the transferor’s state tax liabilities.  This change should add a higher degree of certainty in business sales and purchases regarding a buyer’s assumption of […]