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IRS Procedural Update; Buy-Sell Development; Loan Guarantees


Drawn from Steve Gorin’s 4th quarter 2021 newsletter, this course discusses certain recent IRS developments in tax practice, a recent case on using life insurance to fund buy-sell agreements, and recent cases on loan guarantees. 

IRS developments include guidance extending electronic signatures (including what is permitted), describing the effect of superseding returns, and reliance on FAQs the IRS posts. We will also briefly mention advocacy relating to incorrect IRS penalty notices.

Then we will turn to planning in light of a September case increasing the value of a business interest due to life insurance the company received on the insured’s death that the company was required to use to buy the business interest. First, we will review various income tax issues relating to using life insurance. Next, we will discuss the choice between a purchase by the business entity (a redemption) and a purchase by the remaining shareholders (a cross purchase). We will then discuss the estate tax effect of buy-sell agreements on valuing the decedent’s business interest and describe the risks that redemptions have, describing the leading cases on that topic. We will conclude that topic with using a life insurance LLC to fund a cross purchase. 

Finally, we will discuss using loan guarantees to provide substance to loans to borrowers that have modest net worth. We will review the consequences of loan guarantees and some recent income tax developments that generally inform guarantees and loans, with a very brief reference to new regulations regarding the switch from LIBOR. 

The live presentation of this webinar was approved for 1.5 hours of general CLE credit in California, Illinois, and Texas; 1.8 hours of general CLE credit in Missouri; and 1.5 hours of professional practice CLE credit in New York. CLE credit is no longer available for this recording.

Steve Gorin

For technical materials supporting the slides, please see Steve's newsletter.

Originally Presented:
January 25, 2022