I’m a little late to the game, but recently I’ve been watching a lot of Showtime’s excellent series, Homeland.  I mean, a LOT.  As in, I can’t recall when I last walked or fed my dog.  Do I even still have a dog?  In fact, if any of you out there are not watching Homeland, could you please check on my dog? If you’re not familiar with the show, the basic premise is that U.S. Marine Sergeant Nick Brody was taken and held as a prisoner of war during the Iraq War of 2003.  He is discovered 8 years later during a U.S. military operation and returned to his family.  On the slightly less geopolitical side of things, Brody must now reassimilate into his old life with his wife, daughter, and son.  The son was barely an infant when Brody was captured, his daughter is now in high school, and his wife is now hastily exiting a relationship with Brody’s friend. How did this happen?  As several characters note, they thought Brody was dead.  After …

A recurring theme in business is the idea of paying now or paying later.  Despite careful planning, eventually, somehow, certain costs are going to have to be paid. It’s merely a question of making it hurt less.  Timing can be an immensely helpful palliative. However, whether you pay now or pay later has already been decided in many cases.  Section 162 of the Internal Revenue Code sets out which business costs you can deduct this year, and Sections 263 and 263A determine which business costs you may not deduct this year, but rather, will have to capitalize and recoup over the course of several years. Section 162 allows a business to deduct expenses that are ordinary and necessary.  The statute specifically allows a deduction for reasonable compensation, travel expenses, and rentals (e.g.: equipment for the business).  In addition to these, think of things like office supplies or incidental maintenance like fixing a broken toilet in the office.  Some interest and some taxes are also deductible. Sections 263 and 263A are the other half of the …

In a recent post, we alluded to the existence of another entity, the limited partnership (LP).  A limited partnership is just like a regular partnership except, in some cases, it’s better.  As with the other forms we’ve discussed the advantages hinge on liability and tax, and the form is better suited to some businesses than to others. The simplest LP will have two partners, a limited partner and a general partner.  The general partner is just like a partner in a general partnership – the type we’ve discussed before. The general partner faces potentially unlimited liability for the debts and obligations of the partnership.  The general partner controls the LP and runs it just like a partner in a regular, general partnership. A limited partner has a different and…well…limited role.  The limited partner does not take part in decision-making or exercise control over the LP.  The fact that the limited partner does not exercise control or decision-making authority over the entity is the source of the limited liability.  In essence, the limited partner is a …

NBC News, from a story sourced in the New York Post, reported today that James Gandolfini left most of his $70 million estate to his children.  He also left several large gifts to various friends and relatives. The story remarks that the bulk of Gandolfini’s estate will go to his children through a trust with a provision that basically keeps the assets from their control until they turn 21 years of age. A trust is prudent in this case, but what is not necessarily clear is why the trust was set up as a testamentary device.  Why wasn’t there already a trust in place with provisions to pour over the residue of Gandolfini’s estate into the trust at his death?  There are good arguments to be made that a revocable inter vivos trust is not an appropriate tool. However, as we have mentioned before in discussing trusts and revocable trusts specifically, one of the advantages of a revocable inter vivos trust is the element of privacy.  Because a trust is contractual in nature, and it …

This is the last entry on the basic business entity forms (we’ll get to others like limited partnerships later).  Limited liability companies (LLCs) are really the best of both worlds, combining the most favorable attributes of partnerships (flexibility and taxation) with those of corporations (limited liability).  They’re a relatively new form, and, as such, not all of the law concerning LLCs is necessarily settled.  However, they are common enough that many businesses do not (and should not) hesitate to use them. The presentation below summarizes their most basic (and generally relevant) characteristics.  After you’ve clicked through it,  and you’re wondering how they differ from the other available corporate forms, feel free to go back and take a look at similar presentations on C-Corps, S-Corps, and partnerships.

It’s been a busy month.   I like to think that there is not an inverse correlation between how much actual law I’m practicing and how much writing I’m doing, but the last few weeks seem to have shown that what I like to think sometimes counts for less than I would like. Before this involuntary hiatus, we had shown you a couple of presentations on business entities – first C-corps, and then S-corps.   Today, we dial it back to the most fundamental form of business entity other than a sole proprietorship or simply doing business as yourself: the partnership. In Texas, a partnership is defined as “an association of two or more persons to carry on a business for profit as owners.”  That’s it.  We’ll let the Powerpoint take it from here.

Recently, a friend of a friend was diagnosed with cancer.  She has limited means, and so her friends threw her a fundraiser.  They intended to donate the proceeds to pay for her medical care. It’s a good plan, right? Sure, but there’s a way to go about doing it.  First, there is the issue of public assistance.  In some cases, someone could qualify for assistance of some kind to help pay for her treatment.  Think Medicaid or something similar.  If the fundraiser is a success, and she ends up with a significant sum of cash, she could lose her eligibility for any form of assistance until that cash is gone.  But keep in mind, often, while the money raised is enough to disqualify someone from assistance, it’s not nearly enough to realistically cover medical expenses, only to assist in some quality of life or other related expenses. Second, and more central to this post is, what is the tax treatment surrounding the donations and her medical expenses? Let’s cover medical expenses first. The general rule …

What better way to wrap up the week than with a Powerpoint presentation on S-corporations on a Friday? I mean, who amongst you, isn’t saying that to him or herself right about now? No, really, you can raise your hands. [Sigh]. Well, if you are interested, today’s entry is a follow up to last week’s Powerpoint on C-corporations, although today’s entry goes over the nuts and bolts of S-corps.  Like last week’s post, it’s quick, and just click on the slides to bring up the content and move through the slides. Have a great weekend.

Last month, we told you about a massive data leak which published the names of thousands of wealthy individuals who keep their money “offshore” for reasons of tax planning and – now moot – privacy. Those tax havens are back in the news.  Reuters yesterday reported that the U.S. Department of Justice (DOJ) and the IRS had received authorization from a federal court to serve a John Doe summons on Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB).  According to the Reuters article: “The IRS uses ‘John Doe’ summonses to get information on possible tax law breakers whose identities are unknown. “This John Doe summons directs Wells Fargo to produce records identifying U.S. taxpayers with accounts at FCIB and other banks that used FCIB’s correspondent account,” the statement said. In a declaration filed to the court, a senior IRS revenue agent said many FCIB customers in the John Doe class may have been under-reporting income, evading income taxes, or otherwise violating the internal revenue laws of the United States.” Notably, the IRS focus appears to be …

Some interesting news on estate planning and elder law this weekend.  The first comes to us from The New York Times via Deborah Jacobs over at Forbes. According to a Saturday article in The New York Times, a Holocaust survivor and successful real estate developer named Roman Blum died in 2012 with no heirs and surviving family members; the articles notes that his former wife died in 1992, and he and she had been childless. He also left no will.  As we’ve discussed before, dying intestate can be a real hassle; in this case, however, it was exceptionally problematic.  Mr. Blum left behind an estate worth $40 million. After briefly considering the question “Why did he do it?  How could he do it?” the next appropriate question is: “What happens now?” This is a New York case, but the general answer there applies here in Texas as well. The short answer is that his estate will escheat.  What is escheat?  Escheat is the doctrine under which the property of a person reverts to the state …