Final regs. on Chapter 14 simplify valuation rules

Article Abstract:

Chapter 14 serves as a replacement to Section 2036(c) and provides final regulations on the valuation of transfers of interests in estates and the applicability of estate tax freezes. In comparison to Section 2036(c), Chapter 14 is limited to family-held interests such that the freeze technique employed becomes the basis for determining who constitutes the members of the family. The final regulations on Chapter 14 apply to situations where the interest retained is in the form of an equity interest. Excluded from Chapter 14 are contracts involving debt or employment. The estate freeze techniques included under Chapter 14 are the transfer of corporate and partnership interests as discussed in Section 2701, trust interest transfers as contained in Section 2702, buy/sell agreements and options as contained in Section 2703, and lapsing rights as discussed in Section 2704.

Laws, regulations and rules, Transfer taxes, Estate freezing

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Avoiding the tax bite in converting to an LLC

Article Abstract:

Many corporations have recognized the benefits of transforming themselves into a limited liability company (LLC). However, any decisions on whether or not to convert should follow a careful consideration of the tax implications that may arise from such a transition. One of the main factors to consider is whether the new LLC will be treated as a partnership or a corporation for tax purposes. If it will be treated as a corporation, no negative tax consequences will likely develop. However, if treated as a partnership, gain recognitions will occur with related tax liabilities. Based on existing Regulations, the features used to find out whether to tax an LLC as a corporation or partnership are continuity of life, centralized management, limited stability and free transferability of interest. Those considering to convert would do well to seek the advice of a tax expert.

Analysis, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation)

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Limited liability companies are increasingly popular

Article Abstract:

Limited liability companies (LLCs) provide the advantages of corporate operations without subchapter S corporation restrictions. The LLC offers both the tax benefits of partnerships and the advantage of a corporation's limited liability. It may be thought of as a partnership created for the purpose of federal income taxes. It is conceptualized to prevent eventualities such as double taxation. Businesses with joint operations that traditionally opt for subchapter K will find the LCC attractive and advantageous. LLC corporate ownership may also emerge as a favored alternative to the election of consolidated returns. The LCC may also serve as an efficient means of evading certain factors of the consolidated return Regulations.

Usage, Partnership, Partnerships

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