Rights of a Texas Corporation's Minority Shareholder: More Limited Still... [ read ]
A minority shareholder of a closely held Texas corporation wanted out. She asked the corporation to buy her shares. In response, the corporation offered her a price that she believed inadequate. She asked the corporation to cooperate with her in selling her shares. In particular, she asked the corporation's president to meet with a prospective buyer. The president declined to meet, citing advice of counsel. (Although the facts are more complicated this is the boiled-down essence.)
Perseverance Pays Off: IRS Returns Seized Cash to Store Owner... [ read ]
Nearly two years ago, Khalid Quran, a convenience store owner in North Carolina, obtained an unwanted firsthand account of the power that the IRS has when seizing funds that it suspects were deposited and/or withdrawn in violation of federal currency reporting requirements. In June 2014, the IRS seized $153,907 from Mr. Quran's business account because he allegedly made several withdrawals of cash under $10,000.
The Latest IRS Scam--The Scammers are Getting a Little Smarter... [ read ]
I had a good friend send me a letter that one of his clients received from the "IRS". The letter is a hoax and another attempt by scammers to take money from people.
Taxpayers Beware! Fifth Circuit Appellate Court Applies the "Self-Rental Rule" to Preclude Taxpayers from Applying Passive Loss Against Rental Income... [ read ]
Earlier this month, the Fifth Circuit Court of Appeals had occasion to decide the applicability of the "self-rental rule" in Treas. Reg. § 1.469-2(f)(6) in the context of a Subchapter S corporation renting commercial real estate to its affiliated Subchapter C corporation. See Williams v. Comm'r, 2016 BL 28240, 117 AFTR 2d ¶ 2016-393 (5th Cir. 2016). The court's decision is notable because the Fifth Circuit essentially ignored the S corporation's involvement in the transaction in applying the "self-rental rule."
Golden Opportunities – Personal Goodwill Can Reduce Federal Income Tax Liability from Sales of Businesses... [ read ]
In the right circumstances, a taxpayer may be able to significantly reduce his/her federal income tax liability from the sale of his/her business by establishing that the buyer separately bargained for the purchase of that taxpayer's personally-owned property (referred to herein as "personal goodwill"). This is because a sale of personal goodwill, if respected, would result in only a single taxable event, with the taxable gain potentially subject to the beneficial long-term capital gain tax rate (with a current maximum marginal tax rate of 20%).
IRS Delays Basis Consistency Reporting Due Date... [ read ]
IRS extends the filing deadline for the new Form 8971 to March 31, 2016.
It's a Trap! Taxable Property Contributions to Partnerships with Related Foreign Partners – Treasury Intends to Promulgate and Retroactively Apply Regulations... [ read ]
Conventional wisdom is that the U.S. income taxation of partnerships is advantageous compared to the taxation of corporations for many reasons, one of which is that it is often easier to contribute "built-in" gain property to a partnership without triggering taxation of that gain. Nevertheless, some property contributions to partnerships are treated as taxable transactions.
Basis Consistency Reporting Due Date for Estates... [ read ]
On Jan. 29, 2016, the Internal Revenue Service released Form 8971, "Information Regarding Beneficiaries Acquiring Property From a Decedent" with instructions. The form must be filed by any estate with an estate tax return that was required to be filed after July 31, 2015.
The 5th Circuit Overturns Fraud Conviction... [ read ]
The 5th Circuit last week vacated the fraud convictions of Mike Baker and Mike Gluk. Mr. Baker was the CEO of ArthroCare Corp., a publicly traded company, and Mr. Gluk was the CFO. The government accused them of violating security laws by fraudulently overstating the gross receipts of ArthroCare.
New Statute Provides Remedy for Overissuance of Stock... [ read ]
Often, shareholders of small and midsized corporations who also serve as the governing persons of those corporations must devote so much of their time and energy to business operations that corporate formalities may be overlooked and actions taken without proper approval. An example of such a situation is the issuance by a corporation of stock in excess of the number of authorized shares included in the corporation's Certificate of Formation, which happens more often than you would expect. Fortunately, a new amendment to the Texas Business Organizations Code ("TBOC") provides a relatively simple remedy for the overissuance of shares by Texas corporations.
