Our discussion of debt as part of a business's capital structure will begin with a recent case where debt that included bonus interest on the sale of the secured asset would be recharacterized as equity to some extent. Next will be an overview of the limitations on deducting business interest. Then we will return to whether an arrangement is a business or something else and whether that arrangement is in the form of a loan, a partnership, or a trust. We will conclude by discussing ordinary income generated when a pass-through entity is sold.
Learning Objectives:
- Summarize how loan guarantees work
- Evaluate estate and gift tax issues involving loan guarantees
- Name income tax issues involving loan guarantees
- Describe the common law of when debt may be recharacterized as equity
- Define limitations on deducting business interest and how to avoid those limitations
- List other issues in recasting debt as equity or equity as debt
- Determine whether a trust may be recharacterized as a business entity
- Give examples of tax paradigms for selling a business
- Recognize when the sale of a pass-through may generate ordinary income
- Identify ways to work around ordinary income on the sale of a business
Steve Gorin, CGMA, CPA, J.D.
Thompson Coburn LLP
Partner
sgorin@thompsoncoburn.com
(314) 552-6151
Steve has drafted trusts and a full range of estate planning documents for clients to help grow, preserve, and transmit their family wealth. He has also prepared organizational documents for limited liability companies, corporations, and partnerships to implement their owners' wishes regarding current and future control and transmission, including bringing in new owners and facilitating exit strategies.
Steve enjoys helping clients structure their affairs to achieve their personal, business, and financial goals while reducing the drag that taxes imposed on them. His firm provides full service to businesses; however, he also acts as counsel on specialized matters while cooperating and facilitating the continued involvement of an existing legal, accounting, and financial services team. Steve maintains his CPA license but prefers to refer income tax returns to practicing CPAs.
Steve Gorin is the former president and an ongoing contributor to Covenant Place’s strategic initiatives. It is a senior affordable housing community with a groundbreaking model for integrated residents with the surrounding community and facilitating holistic services to enrich their lives.
To know more about Steve Gorin, kindly click on the link below:
http://thompsoncoburn.com/people/steve-gorin
For various free resources Steve offers, see https://www.thompsoncoburn.com/insights/blogs/business-succession-solutions/about
Mariquita Barbieri, LLM
Thompson Coburn LLP
Partner
mbarbieri@thompsoncoburn.com
(314) 552-6040
Mariquita is an experienced and results-driven M&A and tax attorney who negotiates and closes complex transactions. A former corporate counsel herself, she frequently serves as outside general counsel to clients, providing practical guidance on a full range of legal, business and compliance matters.
Mariquita represents clients in mergers and acquisitions of all types, including complex commercial transactions involving stock, membership interests, asset purchases and sales and real estate. She has also negotiated and closed numerous tax-free reorganizations of multi-million-dollar corporations. A seasoned deal lawyer, Mariquita works closely with clients to ensure their goals are completely understood and accomplished, right-sizing legal work to the client issue and deal size.
About Our Presenter
For approximately 90 years, Thompson Coburn LLP has provided the quality legal services and counsel our clients demand to achieve their most critical business goals. Whether helping with a tax, estate planning, real estate or employment issue, navigating a complex acquisition or defending a product or service in litigation, we have the knowledge and resources to meet any legal need.
With over 380 attorneys, we have experience in more than 50 areas of the law. Supported by our firm's state-of-the-art technology, lawyers in our Chicago, Dallas, New York, Los Angeles, Southern Illinois, St. Louis and Washington, D.C. offices enjoy a nationwide practice.
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