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Posts from April 2006.
Posted in Litigation

Businesses that suffer losses on unpaid invoices when a customer files bankruptcy frequently have salt applied to the wound by being asked to return payments received from the debtor-customer. The federal Bankruptcy Code permits recovery of payments made by the debtor within 90 days of the bankruptcy filing (referred to as a “preference”) under certain conditions.

Posted in Tax and Finance

The family foundation has become a highly popular method for families to engage in charitable giving programs on a collective basis. It is a charitable fund which the family itself generally funds and controls. Another popular estate planning tool is the charitable lead trust. It allows the donor to provide an annuity to charity for a set term of years, after which the remaining trust assets pass to the family at a reduced or no gift tax cost. The desire to marry the two, by having the donor create a charitable lead trust which makes the annual annuity distribution to the donor’s own private foundation, has met with an estate tax roadblock; if the donor retains control of the annuity distributions after their receipt by the family foundation, then the charitable lead trust assets are still includible in the donor’s estate for federal estate tax purposes.

Under the laws of most states, a surviving spouse has a right of election to renounce a deceased spouse’s Will and take his or her statutory share of his or her deceased spouse’s estate. Even if the deceased spouse died without a Will, the surviving spouse is still entitled to take his or her statutory share of the estate. This right of election produced unexpected results if the deceased spouse had created a charitable remainder trust (CRT) during his or her lifetime, at least in those states where such trusts are subject to the surviving spouse’s statutory share rights.

One of the drawbacks of doing business as an S-corporation is the limitation on the number of shareholders that it may have. However, the 2004 Jobs Act contained some good news for S-corporations. First, the maximum number of permissible shareholders was raised from 75 to 100. Second, family members could elect to be treated as one shareholder for purposes of determining the number of permissible S-corporation shareholders. A family is defined as the common ancestor and all lineal descendants of the common ancestor, as well as spouses, or former spouses, of these individuals.

What is your company worth?

The answer to this question often hinges on what confidential and proprietary information your company possesses that gives you a competitive advantage in the market. Therefore, the protection of such information is critical to the long term success of your enterprise.

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