Tax Analysts provides news, analysis, and commentary on tax-related topics, including the latest developments affecting closely held business organizations.
Closely held businesses are businesses with relatively few owners. They can be structured or organized as C corporations, S corporations, partnerships, or limited liability companies, among other options. They are not always small businesses.
Owners of closely held C corporations must be aware of provisions in the tax code (the Internal Revenue Code, or IRC) such as the personal holding company rules in section 542 and the personal service corporation rules in section 269A.
Closely held businesses face tax concerns involving payment/salary for owners and other highly compensated employees, and must plan for the transfer of ownership between family members in family businesses, including through employee stock ownership plans (ESOPs), and other related estate planning and retirement planning. Section 409A governs nonqualified deferred compensation. Section 132 and the regulations thereunder discuss the provision of tax-free fringe benefits. Under section 1372, for fringe benefit purposes, 2-percent shareholders of S corporations are treated as partners in a partnership.
Business owners usually serve dual roles in closely held businesses, giving rise to questions of relationships, such as whether a partner is an employee, whether an investment is debt or equity, as well as creditors' rights in bankruptcy, the sale of corporate goodwill or personal goodwill (see Martin Ice Cream), and self-dealing with rentals and leases.
Tax Analysts consistently and promptly publishes all news, guidance, and relevant developments regarding closely held business organizations.