Abstracts » Business

Affiliated group rules change, but tax savings exist for those that still qualify

Article Abstract:

There are usually a number of significant non-tax reasons for establishing or maintaining more than one corporate entity while managing business activities owned by one person or a group, including protection of assets against the claims of creditors; labor or legislative considerations; providing an equity interest to key employees; making the sale of a particular activity easier; as part of overall estate planning; or to customize buy-sell agreements in connection with parts of a business. The decision between a single corporation or multiple corporations has been neutralized to a great extent by Congress in terms of the tax considerations involved. An analysis of the advantages and disadvantages of single and multiple corporations in terms of tax and non-tax considerations is provided.

Laws, regulations and rules, Tax consultants, Affiliated corporations

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Tax cost of protecting executives when corporate ownership changes has increased

Article Abstract:

Many corporate executives have 'golden parachute' agreements, supplemental employment contracts that provide for substantial severance pay when specific conditions are met, the most common of which is a change in ownership or control of the corporation. The Deficit Reduction Act (DRA) enacted Section 208G, which limits the deductibility of such payments, and Section 4999, which imposes an excise tax on executives receiving payments that have been disallowed at the corporate level. These regulations have led to a number of changes in golden parachute agreements, several of which are described, including what is referred to as 'reasonable compensation' for services actually rendered.

Compensation and benefits, Compensation management, Executives, Executive compensation, Tender offers (Securities), Tender offers

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Selecting the most advantageous type of reorganization in corporate acquisitions

Article Abstract:

Section 368's reorganization provisions allow corporations to restructure their corporate affairs in the most efficient manner possible, usually without incurring an income tax when the reorganization occurs. The different provisions of Section 368 and other related sections must be satisfied in order for corporations to receive tax-free treatment during reorganizations. Along with those provisions, several judicial requirements must be met as well, each of which is described. Also described are statutory requirements, Section 338 elections, carryover limitations, liquidation of a subsidiary, and Section 338 and Subchapter S.

Mergers, acquisitions and divestments, Acquisitions and mergers, Business planning

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