Taxation

Overview

Federal, state and local taxation has a real economic effect on the value owners of a business realize in the course of their operations. Without proper planning, taxes can drain a company of crucial working capital that should otherwise be available to invest in the business. One of our goals in the Taxation practice group is to provide clients with options for the ownership and operation of their businesses that minimize tax liability without compromising the manner in which they conduct business. Each member of the Taxation practice group holds an advanced degree in taxation, which, when combined with years of practical experience in counseling clients in tax law, enables our attorneys to competently identify issues and provide reasonable strategies for addressing them. Whether counseling clients on the choice of entity for ownership of a business, structuring growth strategies involving joint ventures or mergers and acquisitions, or planning for the owner’s exit from the company through transition to family members, employees or third party buyers, the members of the Taxation practice group provide clients a wealth of tax knowledge to supplement and enhance their business planning.

Choice of Entity

A decision as basic as what type of legal entity to use has tax implications that can affect the business for years to come. Without adequate counseling on the tax ramifications of the particular entity of choice, an entrepreneur may find himself or herself operating a business using a structure that generates unexpected adverse tax consequences. There are so many types of entities to choose from that an entrepreneur can easily select an entity that is inadequate for his or her vision without proper advice from experienced tax counsel. Our attorneys will help develop ownership structures using a wide variety of entities, including: Subchapter C and Subchapter S corporations, limited liability companies, limited partnerships, limited liability partnerships, non-profit entities, professional corporations, professional associations, tenancies-in-common, real estate investment trusts, and captive insurance companies. Even if business owners find themselves using entities that do not meet their expectations, we also provide advice on conversions of entities in a manner that minimizes possible tax consequences.

Growth Strategies

During the normal lifecycle of a business, the opportunity for growth and expansion will arise. Growth can be facilitated through mergers and acquisitions, financings and refinancings from traditional lenders, bond financings, private equity firms, joint ventures, and restructurings of current operations. Depending on the particular growth strategy adopted, an entrepreneur will encounter tax issues that are unique to the strategy employed. Our attorneys strive to help businesses with growth decisions to ensure that the strategy adopted will be given the best opportunity for success while minimizing the possibility of unexpected tax consequences.

Exit Strategies

Many entrepreneurs come to a point in their venture when the decision is made to exit their enterprise. Sometimes the owners are in a position to dictate those circumstances, but other times they are forced to exit due to economic realities. Our attorneys have experience in counseling clients in structuring their exit from a business in ways to minimize the tax consequences of their choices. The method of exit can take many forms: a sale to family members or other owners, introduction of key employees into ownership through incentive compensation or employee stock ownership plans (ESOPs), or outright sales of stock or assets to third party buyers. In the unfortunate event that a business must be wound down due to financial difficulties, our attorneys can also advise clients in planning for the often overlooked tax consequences arising from liquidations and debt workouts, including cancellation of indebtedness income.

Tax Incentives

Federal, state and local governments often use tax policy to encourage and aid particular industries or businesses. Countless businesses forgo these tax incentives because they are not familiar with these issues. Our attorneys advise clients on the availability of federal credits, including new markets tax credits, low-income housing credits, GO Zone credits, and energy tax credits. The members of our Taxation practice group also regularly represent businesses in negotiations with state and local governments to obtain incentives such as tax abatements, capital investment credits, site preparation credits, enterprise zones and other industry specific incentives. Our attorneys regularly monitor federal tax law for new, or modifications to current, tax credits and incentives that can give our clients the ability to free up more working capital.

Tax Controversy

At times businesses find themselves at odds with either the Internal Revenue Service and/or the Alabama Department of Revenue. Our attorneys have experience representing clients before the Internal Revenue Service in an effort to obtain relief at all levels, whether through negotiations directly with the Service or through litigation before the Tax Court or Federal district courts. At the state level, our attorneys have defended clients in disputes with the Alabama Department of Revenue concerning the various types of state and local taxes, such as income and sales and use taxes.

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