Tax Planning and Controversies
Running a profitable business requires successful tax planning and the right counsel at your side. Our tax planning team led by Dan Baucum is well versed in business purchases, sales, start-ups and split-ups as well as other tax issues that arise. And when tax disputes arise, our team fights hard to identify significant issues and develop strategies that lead to success.
FBFK’s Tax Team offers comprehensive knowledge and in-depth experience as tax counsel in business purchases, sales, reorganizations, start-ups and split-ups. We can assist you with choosing the right business structure for your domestic and international businesses as well as with investments where taxes are an integral part of the transaction. Our attorneys have decades of experience in both government and private practice and are experts at tax planning related to LLCs, limited partnerships, S corporations, and other business entities including C corporations. Our team provides innovative tax solutions to your business and investment challenges in line with your goals. For closely held business owners, the FBFK team also seamlessly combines tax structuring with asset and estate preservation and planning.
FBFK’s Tax Team is by your side when facing high-stakes audits or tax appeals of an unfavorable audit. The FBFK team brings with them a thorough understanding of both IRS practice and federal tax issues that can arise during IRS audits and appeals. Our attorneys have significant IRS Chief Counsel experience representing clients in requesting IRS private letter rulings for complex federal tax issues and inadvertently terminated tax elections. Whether engaged at the beginning of a tax controversy, or called in after other attempts have failed, the FBFK team fights hard to identify significant issues and develop strategies to achieve the client’s objectives. They work to negotiate a resolution at the administrative level to avoid the additional cost and distraction that can accompany tax litigation. If litigation is inevitable, the FBFK team has the experience and know-how to position the matter for litigation and present the case to achieve the best result.
The breadth of our capabilities and experience in business and transactional tax matters includes:
- Tax free acquisitive reorganizations
- Tax free dispositive reorganizations
- Structured taxable acquisitions and divestitures, including Section 336(e) and Section 338 transactions
- Tax free spin-offs, split-offs and split-ups
- Corporate formations, joint ventures and liquidations
- Financings and recapitalizations
- Net operating loss limitations
- Section 1202 transactions
- S Corporation transactions and planning
EQUITY/INCENTIVE COMPENSATION PLANNING
- Non-qualified stock option (NSO) plans
- Restricted stock plans
- Stock appreciation rights (SARs) and phantom equity plans
- Carried interest and other “profit interest” or “promote” structures
- Cash bonus plans
- Section 409A compliance
PARTNERSHIP/LIMITED LIABILITY COMPANY TAXATION
- Tax free formations, redemptions and liquidations
- Tax-free “roll-over” transactions
- Structured taxable interest and asset acquisitions and divestitures
- Leveraged recapitalizations
- Mergers and divisions
- Disregarded entity transactions and planning
- Negotiating and drafting Partnership and LLC agreements
- Special allocations
OTHER BUSINESS TAX PLANNING
- Choice of entity planning
- Partnership agreements
- Limited liability company (LLC) agreements
- Buy-sell agreements
- Installment sales
- Personal goodwill dispositions
- Private Letter Rulings
- Bankruptcy and workout tax matters
- Inbound and outbound transactions
- Opportunity Zones
REAL ESTATE TAXATION
- Tax free “like kind” exchange; or Section 1031 transactions
- Capital gains planning
- Carried interest or “promote” structures
- Choice of entity planning
- Acquisitions and divestitures
STATE LOCAL TAX
- Sales and use
TAX EXEMPT ORGANIZATIONS
- Formation, qualification and operation of tax-exempt organizations under Section 501(c)
- Prohibited transactions
- State and local tax exemptions
Our Tax Planning and Controversies Team
Candice L. DavisOf Counsel
Bankruptcy and Restructuring, Tax Planning and Controversies, Transactional Law
Representative Tax Planning and Controversies Matters
“EGG SHELL” AUDIT DEFENSE
- Represented taxpayer in IRS audit involving allegations of failure to file accurate returns and report income.
PURCHASE OR SALE OF CLOSELY HELD BUSINESSES
- Represented buyers or sellers in the sale of assets or equity in closely held business, including negotiating the letter of intent, negotiating representations and warranties, drafting the purchase or sales agreement, addressing securitization issues, transferring the assets or equity, and closing the deal.
FORMING AND OPERATING CLOSELY HELD BUSINESSES
- Assisted clients in choosing the correct business entity for their start up, drafted and filed entity formation documents, and documented governance choices related to critical business choices and operations.
IRS AUDIT DEFENSE
- Successfully defended a family-owned manufacturing and real estate business based in Hawaii and Texas, negotiating and settling income tax issues raised during audit and avoiding potential gift tax assessments.
OFFSHORE TAX PLANNING
- Provided taxpayer advice on tax reporting responsibilities and implementing a business reorganization plan to simplify U.S. tax reporting issues for an offshore business enterprise and evaluating strategies to reduce taxpayer’s current U.S. tax liabilities.
DEFENSE OF CHARITY’S BOARD MEMBER FROM UNPAID EMPLOYMENT TAXES
- Defended volunteer charity board member from being held responsible for unpaid employment tax assessments stemming from Executive Director’s actions.
FAMILY OWNED BUSINESS SUCCESSION PLANNING
- Represented multi-generational family with strategic reorganization of operating business and real estate investments allowing younger family members involved in the business to assume operating roles in specific businesses with oversight working toward the goal of eventually taking operational control, while other family members not actively involved in the family business were guaranteed a financial stake in the business and investments.
PERSONAL GOODWILL IN THE SALE OF C CORPORATION
- C corporation sale structured so that a percentage of the sales proceeds paid directly to shareholder for personal goodwill avoiding corporate level double tax.
REAL ESTATE LIKE-KIND EXCHANGE
- Provided tax advice to real estate investor in Texas involving unwinding several real estate partnerships with unrelated investor partners thorough the tax free like-kind exchange of the partnerships’ investment properties for previously identified replacement investment properties using a reverse deferred “parking” exchange structure to acquire replacement realty prior to the sale of the relinquished property.
- Prepared and filed written arguments with IRS Appeals protesting an auditor’s denial of a charitable deduction by taxpayer who gifted stock in a closely held business to charity. IRS Appeals reversed the auditor’s denial of a charitable deduction in favor of the taxpayer without a hearing solely based upon the written protest filed on behalf of the taxpayer.
INSURANCE COMPANY AUDIT
- Provided IRS practice advice and counsel to an international insurance conglomerate with a significant U.S. presence experiencing a problemed U.S. federal income tax audit In New York arising out of a large tax refund claim filed by its U.S. subsidiary. Assisted in responding appropriately to a combative situation involving an IRS Large Business and International audit team requests for information and unsubstantiated allegations.
TAX FREE RETENTION OF PARTNER’S INTEREST IN REAL PROPERTY SOLD
- Structured the sale of real property by a partnership to allow one partner to retain an ownership interest in the property through a tax free contribution in exchange for a membership interest in the LLC purchaser while other partners received cash in a taxable sale.
PRIVATE EQUITY INVESTOR TAX ADVICE
- Provided tax advice to equity investors in negotiations with the Fund Sponsor regarding proposed revisions of the partnership agreement affecting the tax treatment of the partners.
PRIVATE REAL ESTATE FUND TAX STRUCTURE
- Provided tax advice in connection with the creation of an investment fund to acquire interests in real properties across North America. The fund sought investments from foreign nationals wishing to invest in U.S. and Canadian real estate.
BANK HOLDING COMPANY TAX STRUCTURING
- Provided tax structuring advice to a Texas bank holding company in its merger with and into an out-of-state bank holding company. Consideration for the transaction was a combination of cash and stock.
INVESTMENT FUND TAX STRUCTURE
- Provided tax advice to a newly created pooled investment fund focused on the acquisition of interests in real estate operating companies involved in the development of student housing, senior assisted living, modular housing neighborhoods and self-storage facilities.
CONVERSION OF S CORPORATION TO LLC IN PARTIAL SALE
- Planned and implemented tax free conversion of operating S corporation business into a LLC to accommodate buyer of 50% interest in the business who required that the business be operated as an LLC.
REAL ESTATE SPLIT UP INVOLVING LLCs AND S CORPs
- Planned and implemented the reorganization of multiple entities to facilitate the tax favored split up of real estate businesses to multiple owners.
PRIVATE INVESTMENT FUND TAX PLANNING
- Provided tax advice in the recapitalization of a limited partnership formed to acquire royalty and mineral interests. Arranged additional capital from bank loans and soliciting existing members for additional capital contributions to fund the repurchase of limited partnership interests from partners wishing to liquidate their investment.
News & Events
FBFK attorneys honored in this year’s edition of Best Lawyers in America©, a report based solely on peer review and the “gold standard” in the legal industry. Dan Baucum, Kelly Kubasta, Richard Spencer and Kenn Webb have been recognized among their peers worldwide for expertise in their respective practice areas. Additionally, Rachael Smiley and Ryan Marrone were recognized as “Ones to Watch.”
The Texas Lawbook brings clarity to the WDTX Waco Order in an article featuring a quote from Kelly Kubasta.
In April, the Delaware Chancery Court cleared Elon Musk, CEO of Tesla Motors, Inc. for breach of fiduciary duties in connection with Tesla’s 2016 acquisition of SolarCity Corporation. However, Musk and his board of directors were found to have incurred unnecessary risks by not adopting certain best practices for addressing director conflicts of interests.