![]() Sounds good, right? There’s a catch, though. Finally, imagine the owners – who have no shareholders’ agreement – have just signed a letter of intent for the sale of the corporation’s business. Imagine the trust was properly drafted as a qualified subchapter S trust (or “QSST”), that the trustee observed the terms of the trust, and the current income beneficiary reported the trust’s pro rata share of the S corporation’s items of income, deduction, gain, loss, and credit. Imagine also that several years ago one of the corporation’s shareholders made a gift transfer of some of their shares of the S corporation’s non-voting stock to a trust for the benefit of the shareholder’s child. Imagine, for example, a closely held business organized as a corporation that elected many years ago to be treated as an S corporation for tax purposes. Just as bad, or perhaps worse, in many cases the business’s “self-due-diligence” that should have preceded the owner’s marketing of the business for sale, including tax due diligence, was either overlooked or performed shoddily for example, confirming that the business’s tax elections are in order and remain in effect. Why? To ensure they close before the end of the year. The sheer number of such purchase and sale transactions has been daunting, but the urgency with which many business owners are seeking to complete them – spurred by the approach of the year end, which they view as the dividing line on the other side of which await the above-referenced tax increases – has set a frenetic pace that some owners may come to regret.įor instance, a few business owners seem to have forgotten the negotiating skills that served them so well in building a successful business – they may too readily concede reasonable deal positions rather than push the buyer for a concession, or they may accede to the buyer’s requests rather than resist them or seek some benefit in exchange. How about multi-deal fatigue? It’s actually a manifestation of Build Back Better Fatigue.Īs discussed in earlier posts, many closely held businesses have been or are being sold in response to the threat of significant tax increases under the above-referenced bill. The very next day, Senator Manchin intimated that the bill may not be approved this year. On December 1, the Chair of the House Ways and Means Committee, Richard Neal, said he was skeptical about Congress being able to meet that deadline. During this past week, however, certain key Democrats have expressed doubts over Senator Schumer’s timeline. Sure, the House passed its version of the President’s tax and spending bill on November 19, and the Senate took up the bill after its Thanksgiving recess, with Senate Majority Leader Schumer setting a Christmas deadline for its passage. How many of you are suffering from Build Back Better Fatigue? Seriously, it’s a thing.
0 Comments
Leave a Reply. |