This is an area of the tax law that is continuously overlooked by individuals and small business owners alike. What cannot be over- emphasized is the extreme importance family tax planning provides in the success of any family related/closely held business. Properly adhered to, various strategies can have a great impact on areas such as tax planning, the transition of company ownership and the long-term health and survival of the business.
The ways in which agreements are structured and the type tax entity that is selected, for example, can have a huge tax impact on the business or related family members for years to come. Proper planning and entity selection are critical. For example, an owner of real estate may be better off establishing an LLC (limited liability company) rather than a corporation – due to the tax advantages provided by the flow-through effect of income on that LLC member’s (i.e., owner’s) form 1040, as well as the legal benefits of the LLC formation. A trust formation may provide tax planning advantages and provide a level of anonymity. Please contact my office to discuss these potentially important aspects of family tax planning.