Most tax practitioners are familiar with the fundamentals of structuring closely held businesses, but important structuring considerations are sometimes overlooked. This column highlights some pitfalls that might not always come to the attention of practitioners structuring business arrangements.
Through familiarity with potential exposures and the exercise of caution, unnecessary tax expense and exposure can be avoided. This column, however, focuses primarily on closely held C corporations and multiowner flow-through structures (S corporations and partnerships). References to partnerships include LLCs that are taxable as such. Various considerations – such as tax rate differentials, qualified business income deductions, compensation-related issues, and procedural considerations –are beyond the scope of this column.
