TITLE

One Size Doesn't Fit All

AUTHOR(S)
McDevitt, Timothy J.
PUB. DATE
October 1993
SOURCE
Journal of Financial Planning;Oct93, Vol. 6 Issue 4, p152
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article presents information on how the business remain viable in the transition from one to second generation. The cornerstone of most successful family succession plans is a well-structured buy-sell agreement or shareholders agreement. The author says that he want to confine to the issue of whether the purchase price established in the agreement will be binding upon the Internal Revenue Service (IRS) for federal estate tax purposes. Also the treasury regulations suggest that the price set forth in the buy-sell agreement will be controlling and binding the Internal revenue service if the buy-out price is fixed or determined according to an objective formula in the agreement. The shareholders must be obliged during lifetime to sell the shares at the buy-out price rather than the price offered by a third party. The agreement must be binding during lifetime and at death and the agreement must have a bonafide business purpose. The agreement must not be a device to pass on the decedent's shares to the natural objects of the decedent's bounty for less than full and adequate consideration.
ACCESSION #
5558363

 

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