One Size Doesn't Fit All

McDevitt, Timothy J.
October 1993
Journal of Financial Planning;Oct93, Vol. 6 Issue 4, p152
Academic Journal
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.


Related Articles

  • Family Limited Partnerships and Family Limited Liability Companies. Gobeille, Mark // Journal of Practical Estate Planning;Feb2010, Vol. 12 Issue 1, p27 

    The article offers information on steps to be considered in valuation discounts which are claimed on assets in Family Limited Partnership (FLP) to prevent an attack from the U.S. Internal Revenue Services (IRS). It mentions that FLP is used by wealthy families to create family governance...

  • Valuing the 'Inside Basis' Shareholder Tax Liability. Markee, Laura // Business Valuation Update;Jul2012, Vol. 18 Issue 7, p1 

    The article discusses the valuation of shareholder-level tax liability relating to appreciated real estate inside an S corporation. A case example of an actual valuation assignment where the shareholder-level tax was incorporated into the fair market value conclusion is described. The terms...

  • Estate Tax Saver Targeted. TAYLOR, MARCIA ZARLEY // Progressive Farmer;Oct2016, Vol. 131 Issue 11, p26 

    The article discusses the proposed regulations of the U.S. Internal Revenue Service (IRS) to ban the federal estate taxes for the family-owned farms and businesses across the country.

  • S Corporations, Amended Returns and Statutes of Limitation, Oh My! Wood, Robert W. // M&A Tax Report;Apr2014, Vol. 22 Issue 9, p7 

    The article discusses the amended returns and statutes of limitation in taxation of S Corporations in the U.S. The U.S. Internal Revenue Service (IRS) ruled that taxation for closely held and family businesses will be decided on a case-by-case basis depending on the expiration of the statute and...

  • Avoiding Limited Partnership Income Tax Traps. Weller, James P. // Journal of Practical Estate Planning;Apr2009, Vol. 11 Issue 2, p35 

    The article analyzes the income tax traps that can evolve from contributions and distributions from family limited liability companies (FLLCs). It notes the general rule concerning contributed properties in which built in gains or loss of property will not exist when the property is contributed...

  • Cost-Basis Conundrums. Conlon, Stevie D. // Securities Industry News;4/6/2007, Vol. 19 Issue 14, p4 

    The author comments on cost-basis reporting. According to him, basis reporting makes sure that taxpayers are correctly reporting gains and losses from their stocks and securities portfolio sales and other taxable actions. She says that this has been a big issue in the financial business industry...

  • Practices questioned. SEAN WINTERS, MICHAEL // National Catholic Reporter;9/30/2011, Vol. 47 Issue 25, p1 

    The article focuses on the American Life League, which was flagged by several nonprofit watchdogs due to refutable financial practices that include compensating board members and gaining hundreds of thousands of dollars in business. It says that questions regarding the management of American...

  • Tax Aggressive Behaviour in Private Family Firms - the Effect of the CEO and Board of Directors. Steijvers, Tensie; Niskanen, Mervi // Proceedings of the European Conference on Management, Leadership;2011, p379 

    Tax aggressiveness is defined as downward management of taxable income through tax planning activities which can be legal or illegal or may lie in between. Given that taxes are an important cost for each firm, tax aggressiveness may be desired by its shareholders. In this paper, we investigate...

  • Contingent Fees Under Circular 230.  // California CPA;May2008, Vol. 76 Issue 9, p6 

    The article discusses the issuance of Notice 2008-43 of the U.S. Internal Revenue Service (IRS) in California which provides guidance to practicing certified public accountants (CPA) concerning contingent fees under Circular 230. It further explains that the notice offers interim guidance...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics