Almost all business transactions and real estate transactions have income tax consequences. At Cohen & Caproni, our staff includes attorneys who are also licensed as CPAs or have specialized, advanced degrees in tax law. Our uniquely experienced team can provide financial insight, while guiding you through the legal process. Whether you are selling a business or real estate or making or receiving a gift, you can be certain that Cohen & Caproni will assist you in finding the best tax solution for your situation.
Tax planning includes choosing what sort of business entity to use. For example, a C corporation pays its own income taxes; its shareholders owe no tax on its earnings unless and until dividends are paid. In contrast, an S corporation, a partnership, or an LLC will generally be treated as a “pass through” entity. Owners of these entities will owe taxes on the profits of the business whether or not the profits are actually distributed to them. Similarly, if a business suffers taxable losses, a C corporation can use its losses to reduce the corporation’s tax liabilities (through so-called loss carrybacks or carryforwards), but its shareholders will receive no direct benefit from the current tax losses. If, however, the business is operated by a pass through entity, the owners may be able to offset their losses against income from other sources (subject to a number of possible technical limitations). Good tax planning requires the exploration of all of these options before creating the entity.
Owning, operating, or developing real estate brings with it special tax planning opportunities. Losses from operating rental real estate may or may not be deductible against other income, depending on the sources of the income and the level of income earned by the taxpayer. Developers of real estate can dramatically change their tax results by careful tax planning before buying the first tract. Similarly, a sale of investment or business real estate is a time for tax planning. Taking appropriate steps in advance of the sale will help you make the best business and tax decision. Our firm is experienced in handling Section 1031 or tax free exchanges which may be appropriate when real estate is sold. Let us guide you.
Estate and Gift Taxes
Did you know that gifts between family members and the death of an individual may trigger gift tax or estate tax liabilities and will certainly have income tax consequences? Let one of our qualified tax attorneys guide you through the relevant tax law as it applies to your situation. With proper planning, the tax law provides a number of opportunities for reducing or eliminating any gift or estate taxes, especially if you start planning early and implement your plan over time. Part of any good estate plan for individuals with assets (including life insurance and retirement plans) worth over $11,400,000 requires the evaluation of the tax consequences and decisions regarding the steps necessary or advisable to reduce the estate tax. Proper planning will allow you to make an educated decision about what steps make sense for you.