In structuring a private equity fund or other tiered partnership arrangement, care must be taken to ensure the safe harbor for profits interest received for services is preserved. It is important in the issuance of profits interest to carefully document and substantiate capital account book-ups to protect against IRS contest that the interest is a capital interest. […]
When an IRA holds a nontraditional asset such as an interest in a private hedge fund, the Taxpayer must be extremely careful to provide the annual value for that interest to the custodian and to follow the rules in rolling that nontraditional asset to a new IRA. Failing to do so can result in significant tax implications. […]
In determining the sales price in an acquisition, the seller must determine how assumed liabilities will be treated and either adjust the sales price accordingly or plan to allow the deduction to occur prior to sale. […]
Read More… from Selling a Business: Plan Carefully for Assumed Liabilities and Deferred Compensation
Virtual currencies can have large swings in values from year to year. Where large gains are recognized in one year that are then followed by large losses in a following year, under the annual accounting principle and the Internal Revenue Code the Taxpayer cannot use a capital loss in a future tax year to offset capital gains in a previous tax year. […]
Understanding liabilities on a balance sheet is crucial because it provides a clear picture of a company’s financial obligations, revealing its debt levels, solvency, and overall financial health. This allows stakeholders like executives and directors, investors, and creditors to assess the company’s ability to meet its short-term and long-term financial commitments and make informed decisions about its financial stability. […]
This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation. […]
An earnout is a contractual mechanism in acquisitions that provide for contingent additional payments from the buyer of the company to the seller’s shareholders. Earnouts are usually received if the business that is acquired meets certain financial or other milestones after the acquisition is closed. […]
There can be additional complexities involved in cross-border acquisitions. It is important to understand the tax treatment in each country in order to ensure the acquiror and target receive the desired result. Techniques for acquisitions in one country can be different than in the other and the resulting tax implications can be significant even if unintended. […]
Read More… from The Critical Role of Tax Treatment and Structuring in International M&A
The information found on a company’s balance sheet is among the most important information for a business leader, regulator, or potential investor to understand. Without this knowledge, it can be challenging to know whether a company is struggling or thriving […]
Read More… from How Assets are Reported on the Balance Sheet
Whether you are a business owner, employee, or investor, understanding how to read and understand the information on a balance sheet is an essential financial accounting skill. […]
Read More… from The Balance Sheet: A Key Financial Statement
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