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Planning for Business Exits from C Corporations; Intrafamily Business Transactions; Other Developments


Lower C corporation income tax rates have increased attention to the Code § 1202 exclusion for gain on sale of stock. We will discuss how that and related provisions work, how they compare with other business exit strategies, and a recent Tax Court case that informs intrafamily business sales and loans. We also mention a new favorable IRS position regarding deducting charitable contributions that generate state tax credits for business owners.

You will learn:

  • How the Code § 1202 exclusion works, how it applies when a business changes from another entity to a C corporation, how it informs a C corporation’s business structure, and how it compares to other business exit strategies. 
  • How to move from corporate status to a partnership once the tax benefits of being a C corporation has run its course. 
  • The impact of Dynamo Holdings Ltd. Partnership v. Commissioner, T.C. Memo. 2018-61, which addresses sales and loans between businesses owned by related parties.  It limits the application of a taxpayer-friendly 2009 case on business transfers but also provides hope for those with relaxed documentation of loans. 
  • How states’ reactions to 2017 tax reform imposing a limit on state income tax and personal property tax deductions led to the IRS attacking state tax credits awarded for charitable contributions, which ironically resulted in a Revenue Procedure that provides favorable rules when businesses make those contributions. 

This webinar is an oral presentation and elaboration on Steve Gorin's Business Succession Solutions 4th quarter 2018 newsletter.

The live presentation of this webinar was approved for 1.5 hour general CLE credit in California and Illinois and 1.8 hours of general CLE credit in Missouri. CLE credit is no longer available for this recording.

Steve Gorin 

*Please note that this is a 90-minute presentation

Steve's 4th quarter 2018 newsletter is available here

Steve's current materials, Structuring Ownership of Privately-Owned Businesses: Tax and Estate Planning Implications, are available by emailing sgorin@thompsoncoburn.com

Originally Presented:
January 29, 2019