Choice of Entity After 2017 Tax Reform: Avoiding Tax Pitfalls in Operations, Ownership Changes, Exit Strategies
Capital vs. Profits Interest, Allowable Deductions, Distributions, Exclusions, and Other Planning Considerations
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Corporate Law
- event Date
Wednesday, January 29, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide practical guidance to counsel and advisers on the challenges in the choice of a legal entity under the 2017 changes to the tax laws. The panel will discuss key provisions of the new tax law to be considered in entity selection, and avoiding the tax pitfalls in operations and asset or stock sales. The panel will also discuss capital vs. profits interest, allowable deductions and exclusions under the changed tax law, exit strategy planning, and other critical considerations for effective business planning.
Mr. Sutin helps clients unravel complex legal and business issues related to employee benefit plans, tax-exempt organizations, and business tax planning. He counsels both businesses and not-for-profit organizations on the full range of tax and employee benefits issues.
Ms. Markey represents clients in general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that tax and corporate advice should be both easy to understand and practical. Ms. Markey regularly counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters. She also frequently assists clients with tax controversies, audits, appeals, planning, and structuring, as well as researching tax law and drafting legal appeals and memoranda. Ms. Markey regularly writes and presents on corporate topics and most recently presented seminars on ownership disputes in closely held businesses, advanced tax strategies for M&A deals, and strategic risk assessment for complex commercial transactions.
Mr. Tarr's practice focuses on tax planning for business transactions, including acquisitions and dispositions of businesses, reorganizations, utilizing partnerships and limited liability companies, tax benefits for renewable energy, sophisticated real estate transactions, executive compensation, state and local taxation and audits and tax controversies.
The 2017 tax legislation made sweeping changes to the tax code, impacting decisions on entity selection upon formation or potential conversion to another entity form. Choosing an entity's legal structure is complicated with new tax laws that include a reduction in the corporate tax rate, a new qualified business income deduction for pass-through entities, new rules on carried interest, and a variety of limitations for counsel to consider.
Choice of entity considerations for startups must involve a planning approach to structuring the company that will enable it to achieve its financial and operational goals. For those that intend to issue stock/options, raise capital, spin-off separate business lines, or deal with the particular issues of cashing out or business succession, the choice of entity at the beginning can have significant tax and operational impact on the business. For pass-through entities that have to navigate the 20% tax deduction and its many exceptions, a company's current or intended activities must be evaluated. For others, a conversion to a C corporation should be an available option as well.
State law is also an important consideration when choosing a legal entity. Some states have different tax rates for various entities and are taking differing approaches on how closely they conform to the new federal tax law for state income tax purposes. The complexities involved in entity selection or conversion require counsel to guide business owners to set up the right type of entity to meet initial goals with the flexibility to change the entity form as the business evolves. Failure to do so can create avoidable tax difficulties for business owners in the operation, liquidation, or succession of the company.
Listen as our experienced panel provides a detailed examination of the tax planning considerations and opportunities in advising clients on choosing a business entity.
- Key provisions of the 2017 tax law impacting choice of entity decisions
- Impact on business operations and available planning opportunities
- State law considerations in choice of entity
- Treatment of distributions based on the entity form
- Consequences and potential opportunities in changing entity form
- Effective exit strategy techniques to avoid pitfalls stemming from entity form
The panel will review these and other critical issues:
- Tax and operational considerations for entity structuring
- Planning opportunities and allowable deductions and exclusions under new tax law
- State law considerations and planning opportunities
- The impact of different entity forms in structuring compensation
- Capital vs. profits interest and treatment of distributions based on entity structure
- Implications and opportunities in changing entity form
- Exit strategy techniques and avoiding unintended operational and tax consequences
