September 2005 - #10. Book Reviews: All the Details on Family Business Transfers. Everything you need to know - and more.

Vermont Bar Journal

2005.

September 2005 - #10.

Book Reviews: All the Details on Family Business Transfers. Everything you need to know - and more

The Vermont Bar Journal #162, Summer, 2005, Volume 31, No. 2

Book Reviews: All the Details on Family Business Transfers. Everything you need to know - and more.

by Paul Newman, Esq.

Transferring Interests in the Closely Held Family Business, James John Jurinski and Gary A. Zwick. ALI-ABA, 2004, 316 pp., $136.00

At first glance, this book looks to be a quick guide specific to transferring family businesses. In fact, it is not.

The first part of the book deals with the acquisition and disposition of businesses in general. There is an overview of tax consequences with the pros and cons of asset versus stock sales, followed by a lengthy review of due diligence issues and a discussion of intrafamily transfers. After an overview of tax-advantaged transfer techniques, the authors describe gifting, redemption, installment sales, private annuities, self-canceling installment notes, family limited partnerships, and Grats, Gruts, Crats, and Cruts.

Everyone who has had experience in the acquisition and dispositions of businesses has learned one of the golden rules is using the team approach to bring the deal to fruition. The authors agree, and offer long, detailed descriptions of tax issues and consequences, followed by warnings that the Internal Revenue Service has disallowed such practices or structures. A partnership between a tax advisor, a financial advisor, an employee benefits expert, and a lawyer is crucial. Every lawyer involved in a transaction should be able to spot tax issues and direct them to a tax advisor.

The last chapters deal with Buy-Sell Agreements, Flow-Throughs, Valuation, Retirement Planning, and Estate Planning. In their discussion of the Buy-Sell Agreement, the authors describe advantages and disadvantages, tax consequences, types and features, redemptions, establishment of sales price, and valuation for tax purposes. The discussion of flow-throughs addresses the issues of sale of a proprietorship or single member LLC, disposition of partnership interests generally, sale and liquidation of a partnership interest, retirement or withdrawal of a partner, death of a partner, basis adjustments, issues in partnership acquisitions, and special issues for S Corporations...