Tax Law Defined® Blog

Showing 11 posts by Scott W. Dolson.

Section 1202 Qualification Checklist and Planning Pointers

We recently published four articles discussing the potential benefits of holding and selling Qualified Small Business Stock (QSBS) under IRC § 1202 and diving into the complicated qualification rules. Based on the volume of responses to those articles, we felt that a basic checklist of qualification requirements would help business owners and tax professionals considering structuring or restructuring a business to take advantage of IRC § 1202, or trying to confirm whether their stock is QSBS. Read More ›

Revisiting the Choice of Entity Decision for Closely Held Businesses

Revisiting the Choice of Entity Decision for Closely Held Businesses

Shifting the focus from understanding the Tax Cuts and Jobs Act to considering whether what has changed significantly alters the choice of entity landscape. Read More ›

A Roadmap for Obtaining (and not Losing) the Benefits of Section 1202 Stock

Planning Ideas for Avoiding IRC § 1061's Three-Year Holding Period Requirement

IRC § 1202 has been around for years, but has not received a lot of attention. This inattention has resulted in large part from IRC § 1202's complicated qualification rules, not to mention the planning uncertainties associated with a required five-year holding period. Read More ›

Equity Rollovers in M&A Transactions: Tax and Business Planning Fundamentals

Equity Rollovers in M&A Transactions: Tax and Business Planning Fundamentals

During the past decade, private equity investors and other financial buyers (referred to generally in this article as financial buyers) have dramatically increased their activity in the M&A marketplace. These financial buyers generally acquire portfolio companies with the intention of holding them for around five years and then selling them for a substantial profit. Read More ›

Planning Ideas for Avoiding IRC § 1061's Three-Year Holding Period Requirement

Planning Ideas for Avoiding IRC § 1061's Three-Year Holding Period Requirement

Investment fund managers value compensation in the form of carried interests, which allows them to be compensated for services with income that qualifies for long-term capital gains tax treatment. Numerous efforts have been made during the past decade to cut back or eliminate the favorable tax treatment of carried interests. Read More ›

How New IRC § 1061 Impacts Carried Interests

How New IRC § 1061 Impacts Carried Interests

During the past decade, the White House, Congress and the IRS have threatened on numerous occasions to reduce or eliminate the tax benefits of carried interests ("promotes" in the real estate world). In 2009, legislation was introduced that would have taxed all income from carried interests as ordinary income. Read More ›

Maximizing the IRC § 199A Deduction

Maximizing the IRC § 199A Deduction

Taxpayers who qualify for the IRC § 199A deduction (the "Deduction") will be one of the big winners under the Tax Cuts and Jobs Act (the "2017 Tax Act"). Read More ›

The 21% Corporate Tax Rate Breathes New Life Into IRC § 1202

The 21% Corporate Tax Rate Breathes New Life Into IRC § 1202

In the aftermath of the 1986 tax act and the introduction of LLCs, pass-through entities (LLC and S corporations) replaced C corporations as the default choice for closely-held businesses. Several changes made by the 2017 Tax Cuts and Jobs Act (the "2017 Tax Act") have put this settled planning issue back into play. The 2017 Tax Act reduced the top corporate tax rate from 35% to 21%, eliminated the corporate alternative minimum tax, and left untouched the C corporation's right to deduct state and local taxes. In prior years, the potential benefits of IRC § 1202 tax treatment for C corporation stock were usually dismissed as being too speculative to move the dial in favor of choosing the C corporation. But in combination with the recent tax law changes, the additional benefits of IRC § 1202 make a strong case for at least taking a close look at organizing a new business through a C corporation. Read More ›

Navigating the New IRS Partnership (LLC) Audit Rules

Navigating the New IRS Partnership (LLC) Audit Rules

New laws governing IRS partnership audits (the “New Audit Rules”) were enacted during 2015 and are effective for all partnership tax returns filed for partnership tax years beginning January 1, 2018. Read More ›

Rollover Equity Transactions: Business & Tax Planning Fundamentals

Rollover Equity Transactions: Business & Tax Planning Fundamentals

During the past decade, financial buyers such as private equity firms (PE firms) have dramatically increased their participation in the M&A marketplace. PE firms and other financial buyers generally acquire companies with the intention of holding them for a three to seven-year period and then (hopefully) selling their "portfolio company" for a profit. Most PE firms look for target companies with strong management teams. PE firms also often encourage a target company's equity owners (referred to in this article as "founders") to "roll over" a portion of their equity, so that the founders own a minority equity position in the target company or its holding company after the transaction closes. Read More ›

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Attorney Spotlight

Alison M. Stemler is FBT’s Employee Benefits Team leader. She advises on executive compensation and employee benefits plans, including equity-based and deferred compensation arrangements, and assists with compliance issues for retirement and welfare plans and HIPAA.

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