To operate under these relaxed rules, some states require the corporation both qualify as a
closely held corporation (typically less than 50 shareholders) and elect "statutory close corporate" status.
With uncertainty surrounding the current estate tax law, families inheriting
closely held businesses could be subject to unexpected estate tax liabilities following the death of the patriarch or matriarch owner.
They are all
closely held corporations, and as such, their shareholders may have fiduciary duties to each other that shareholders of publicly traded corporations do not have.
In particular, the so-called 3:12 rules for taxation of
closely held firms (31) are said to discriminate against small firms and in favour of large corporations.
In many cases, this would wipe out the net worth of these
closely held businesses, making it difficult to demonstrate collateral to lenders, to insurance companies and to bonding agents.
E contends that nontransferable IRAs are similar to (1) unassignable lottery payments, (2) stock in a
closely held corporation, (3) stock that is subject to resale restrictions, (4) contaminated land and (5) land that needs to be rezoned to reflect the highest and best use.
This case emphasizes that shareholder advances to a
closely held corporation will be treated as loans if the characteristics of the agreement are similar to those for loans made to the corporation by an unrelated party (For background information on the lack of guidance regarding debt vs.
Closely Held Business: As a tax professional, you need to balance the tax strategies of the business with the clients' needs and their perceived best interests.
The Institute has increasingly become the 'go to' place for the continued development of the most successful
closely held businesses in the region," said Dugan.
Following a discussion of the probate process, the authors discuss business continuation issues for each form of business from proprietorship to the
closely held corporation.
CPAs working with gift and estate tax valuation issues for
closely held stock should keep these decisions and the IRS's acquiescence in mind when computing
closely held stock FMVs on estate or gift tax returns.
SEG's scope of services includes: Sales of
closely held businesses; Business Valuations and Financial Opinions; ESOP Formation, Feasibility and Valuation; and Advisory Services in Distressed Situations.
