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Giving away the family business

Article Abstract:

Family businesses can be planned and structured to facilitate business succession. Ownership interests can be structured to simplify the transfer of the full value of the business from one generation to another. One of the simplest approaches is to bequeath part of the stock as a gift to the next generation. The rest of the stock can be transferred to a charity which then looks to the business to redeem the stock. After the stock is redeemed, the children would own the business. This approach reduces the amount of taxes levied against the business.

SOCIAL SERVICES, Private Social Services, Social Assistance, Inheritance Taxes, Methods, Family-owned business enterprises, Family-owned businesses, Inheritance and succession, Inheritance tax

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Buy/sell agreements key to succession planning

Article Abstract:

The three types of buy/sell agreements that used in business succession plans are cross purchase, stock redemption and an agreement that combines aspects of both. The cross purchase method requires surviving shareholders to purchase a retiring or deceased shareholder's shares. A stock redemption plan requires the corporation to purchase the departing shareholder's stock. The third method allows individual shareholders to purchase the shares before the corporation. All such buy/sell agreements must meet IRS regulations.

Tax Law, Laws, regulations and rules, United States. Internal Revenue Service, Succession planning (Business), Buy-sell agreements

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Compounding outperforms excise tax break savings

Article Abstract:

The suspension of the 15% excise tax on excess distributions for 1997, 1998 and 1999 will not necessarily benefit those people who have accumulated large amounts in qualified tax plans. The 1996 Small Business Act suspended the excise tax, but the government is likely expecting additional revenue from taxpayers stemming from excess distributions. A model based on a sample case is examined in detail.

Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds, Excise Taxes, Analysis, Taxation, Financial planning, Excise tax

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