In a recent taxpayer-favorable case, the Tax Court upheld a loss deduction for a worthless investment under Code Section 165. At issue was an interest held by a partnership in a related family-owned real estate development business. The taxpayer, MCM Investment Management LLC (“MCM”) alleged its interest in McMillin Companies, LLC (“InvestCo”), a real estate…
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The income taxation of life insurance death benefits seems fairly simple initially. Many people know the general rule that death benefits are not subject to income tax. However, there are exceptions that can apply which will cause the beneficiary to owe income tax on the receipt of death benefits. This article describes certain of these…
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Parents are often in a position to help their children take advantage of business opportunities. A parent’s connections, business knowledge, expertise, and other intangibles acquired over may years of work can be used to benefit a child starting a career or business. Likewise, a parent may advance funds to a child to start or acquire…
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One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the fifth in a series of articles which will walk through and generally discuss the steps typically associated with the sale of a business. In Part 1, we discussed the breakdown of the business, the…
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One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the third in a series of articles which will walk through and generally discuss the steps typically associated with the sale of a business. In Part 1, we discussed the breakdown of the business, the…
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All too often, we see cases where failure to properly document a transaction or keep good records is a taxpayer’s undoing. A case recently handed down by the Tax Court illustrates how that can happen. In Moore v. Commissioner the taxpayer sought to expand his tax preparation business. To finance that expansion, Mr. Moore was able…
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It is helpful to remind taxpayers now and then that there do exist plenty of bad-apple advisors out there. Quite often, we at ESA find ourselves helping our clients wind-down, mitigate, and stop erroneous positions and planning put into by place by such bad-apple advisors. Our firm has even assisted in defending audits and tax…
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By holding qualified small business stock (“QSBS”), noncorporate shareholders of qualifying C corporations can sell their stock tax free after a five-year holding period. Tax benefits associated with QSBS are nothing new. However, until recently, planning with QSBS has been neglected. The Tax Cuts and Jobs Act (“TCJA”) breathed new life into the potential benefits…
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After the Summa Holdings case, the substance over form doctrine was left with a significant black eye by the Sixth Circuit. On May 15, 2019, the Sixth Circuit, upheld a transferee liability claim against shareholders of a Tennessee corporation while also clarifying its holding is Summa Holdings. While the Summa Holdings discussion is certainly interesting, the…
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One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the third in a series of articles which will walk through and generally discuss the steps typically associated with the sale of a business. In Part 1, we discussed the breakdown of the business, the…
Read More