IRS Stirring the Pot Again with Micro-Captives: Settlements Announced

On September 16, 2019, the Internal Revenue Service (“IRS“) announced that it would be mailing settlement offers for certain taxpayers under audit who participated in “abusive” micro-captive insurance transactions. The micro-captive transactions were listed as a transaction of interest by the IRS back in 2016. Section 2 of Notice 2016-66 described the transaction itself as…
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The Sale of a Business Part 4: Definitive Agreements

One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the third in a series of articles which will walk through and generally discuss the steps typically associated with the sale of a business. In Part 1, we discussed the breakdown of the business, the…
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Equity as Compensation: The Ins and Outs of the Section 83(b) Election

A common form of compensation for  management and executive level employees is a grant of equity in the employer company, or the option to purchase such equity at a reduced price. Compensation in the form of equity can be a big incentive for employees to join a new company, particularly a startup, or stay at…
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IRS Audits Part III: Specialized Audits and Early Resolution Programs

Introduction This is the third article in a series of articles we are writing on IRS audits. The purpose of this series is to demystify the audit process, inform readers about how IRS audits are conducted, and provide readers with an understanding of the audit process. In Part I of this series, we discussed how…
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Moore: What is a bona fide debt?

All too often, we see cases where failure to properly document a transaction or keep good records is a taxpayer’s undoing. A case recently handed down by the Tax Court illustrates how that can happen. In Moore v. Commissioner the taxpayer sought to expand his tax preparation business. To finance that expansion, Mr. Moore was able…
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Shady Tax Shelter Promoters: The Ballad of Mr. Combs

It is helpful to remind taxpayers now and then that there do exist plenty of bad-apple advisors out there. Quite often, we at ESD find ourselves helping our clients wind-down, mitigate, and stop erroneous positions and planning put into by place by such bad-apple advisors. Our firm has even assisted in defending audits and tax…
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IRS Audits Part II: What to Expect When You’re Expecting (an Audit)

Introduction This is the second article in a series of articles we are doing on IRS audits. The purpose of this series is to demystify the audit process, inform readers about how IRS audits are conducted, and provide readers with an understanding of the audit process. In Part I of this series, we discussed how…
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A Refresher on Qualified Small Business Stock

By holding qualified small business stock (“QSBS”), noncorporate shareholders of qualifying C corporations can sell their stock tax free after a five-year holding period. Tax benefits associated with QSBS are nothing new. However, until recently, planning with QSBS has been neglected. The Tax Cuts and Jobs Act (“TCJA”) breathed new life into the potential benefits…
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What is Going On? Mid-Term AFR is Less Than Short-Term! Here is Why.

For a few months, the short and mid-term applicable federal rates have been on the heels of one another. These rates ride with treasury rates and the economy in general. For some reason, here lately the mid-term rates have been lower on occasion than the short-term rates. I even caught myself thinking, is this a…
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