Business Tax Advice & Planning

Strategic tax planning plays a critical role in preserving a company’s value and supporting long-term growth. Capes Sokol advises companies and business owners on the tax implications of a variety of transactions, from organizing and starting a company, through transitions such as investments, acquisitions and divestitures, and succession planning initiatives. We help clients identify opportunities, minimize exposure, and structure transactions in a tax-efficient manner.

Services Include:

• Choice of entity analysis: Advising business owners on the optimal legal and tax structure for owning and operating a business, including evaluating benefits of a business being taxed as a partnership, S corporation, C corporation, or a disregarded entity.
• Mergers and acquisitions: Providing tax advice in connection with purchases and sales of businesses in taxable and tax-free transactions, including mergers, acquisitions, divestitures, reorganizations, and in making Code Section 338(h)(10) and Code Section 336(e) elections.
• Like-kind exchanges: Implementing and planning for Code Section 1031 like-kind exchanges, including structuring ownership of real estate through tenancy-in-common relationships.
• Private letter rulings: Seeking and securing advance rulings from the Internal Revenue Service regarding the tax consequences of a proposed transaction.
• Succession planning: Providing advice to business owners for transitioning ownership to family members, employees, and/or third parties in a tax-efficient manner.
• Nonprofits: Forming nonprofit corporations, applying for and securing tax-exempt status, and providing on-going advice to maintain tax-exempt status.

Frequently Asked Questions

What should business owners consider when deciding on the tax treatment of their business

Choice of entity from a tax perspective involves consideration of a number of factors, including: the identity and number of owners; whether profit or loss is anticipated in the early years; what assets the entity will hold; the type of business the entity will conduct; and plans for the future.

What is the role of tax counsel in mergers and acquisitions?

Tax counsel can help determine the appropriate means to minimize tax burdens and maximize tax benefits in business acquisitions and divestitures, such as taking advantage of gain exclusion as a tax-free reorganization under Code Section 368 or under Code Section 1202 (Qualified Small Business Stock), or through a basis step-up under a Code Section 336(e) acquisition.

Can an ownership interest in an entity, such as an LLC, be transferred in a like-kind exchange?

Only real property is eligible for 1031 like-kind exchange treatment.  Generally, real property owned by tenants in common is also eligible.

Are nonprofit corporations automatically exempt from income tax

Formation of a nonprofit corporation under state law does not automatically secure tax-exempt status.  After formation, the nonprofit corporation files an application with the Internal Revenue Service on Form 1023 or Form 1023-EZ to request that the IRS recognize the nonprofit as being exempt from Federal income tax