Family Business Advocates

A RESOURCE FOR FAMILY BUSINESS OWNERS AND ADVISORS

One impact of the Tax Cuts and Jobs Act (TCJA), signed in to law at the end of 2017, was the doubling of the standard deduction. The TCJA increased the standard deduction to $24,000 for taxpayers filing jointly or for a surviving spouse, $18,000 for a head of household and $12,000 for single filers. As a result, many taxpayers who previously found it advantageous to itemize their deductions on their federal income tax returns no longer do.…
As noted in Part 1 of this series, Federal Aviation Administration (FAA) rules govern the ownership, operation and use of private aircraft. Most private aircraft are operated under Part 91 or Part 135 of the Federal Aviation Regulations. For reasons discussed below, it is imperative for the family business owner of a private aircraft to determine whether the Part 91 or Part 135 rules govern the owner’s operation of the aircraft and to strictly comply…
The First Amendment broadly protects political speech, and every citizen has a fundamental right to participate in the political process, including making contributions to political candidates and political organizations. However, like any fundamental right, political speech has its limits. Political contributions are heavily regulated by governments and public perception, and you and your family business should consider the following before making a political contribution. 1. It is better to ask for permission than forgiveness. Campaign…
As discussed in Part 1 of this series, the first step in purchasing a private aircraft typically involves the preparation of a letter of intent (LOI) or other nonbinding offer for the purchase of the aircraft. The LOI sets forth the principal terms for the purchase and sale of the aircraft, including: a detailed description of the aircraft and its systems (customarily an exhibit to the LOI); the purchase price and deposit; the identity of…
Access to private aircraft can provide productivity and other benefits for a family-operated business and improve the quality of life for the business owner and his family. However, purchasing, owning and operating a private aircraft requires careful consideration of a number of business, legal, tax and regulatory issues. These issues make it imperative that a small business owner consult with legal and tax counsel to ensure that the owner’s interests are properly represented in the…
I recently met with my friend Matthew Whitaker, the owner of gkhouses, to learn more about the advisory board he established in 2017. With over 1,500 homes currently under management, gkhouses is a regional property management firm for single family homes and is the largest property management firm in Birmingham, with additional offices in Nashville, Chattanooga and Little Rock. Frederic: Why did you decide to form an advisory board? Matthew: I was actually “advised”…
The new Tax Cuts and Jobs Act limits the ability of many businesses to deduct interest payments. Under prior law, any interest expense was generally deductible. Now, many businesses are prohibited from deducting any interest expense that exceeds 30 percent of adjusted taxable income. Before January 1, 2022, the formula for calculating net taxable income generally approximates EBITDA. Beginning in 2022, the formula will generally approximate EBIT. The EBIT formula will make the limitation even…
Buyers often prefer to structure family business acquisitions as taxable asset purchases. In a taxable asset purchase, the buyer is entitled to write up the basis of the seller’s assets to fair market value, and then going forward, receive a tax benefit by depreciating the assets. In addition, a buyer is entitled to amortize goodwill (i.e., the portion of the purchase price in excess of the fair market value of the purchased assets) over 15…
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “2017 Act”) which, among other items, made several changes to the federal wealth transfer tax system with respect to transfers occurring during calendar years 2018 through 2025. Background Prior to enactment of the 2017 Act, the first $5 million (as adjusted for inflation in years after 2011) of transferred property could be exempted from gift, estate and generation-skipping transfer…
As we reflect on 2017, we thank our blog subscribers for making Family Business Advocates a great success. In case you missed them, below are some of our most popular blog posts from 2017: Our family philanthropy series Our family office series Our updates on the proposed (and ultimately withdrawn) IRS regulations affecting valuation discounts for family business owners Our post Emergency Succession: Lessons from Nick Saban and Dabo Swinney. (Following the January 8…