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Rights of a Texas Corporation's Minority Shareholder: More Limited Still
By on February 29, 2016
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
By on February 26, 2016
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an unwanted firsthand account of the power that the IRS has when seizing funds that it suspects were deposited and/or withdrawn in violation of federal currency reporting requirements.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
By on February 25, 2016
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.
By on February 25, 2016
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."
By on February 23, 2016
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
By on February 11, 2016
IRS extends the filing deadline for the new Form 8971 to March 31, 2016.
By on February 10, 2016
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
By on February 3, 2016
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
By on February 1, 2016
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.