Tax and M&A
Tax
Our tax department is known for providing innovative client-focused solutions to complex situations. The focus is on highly technical areas of taxation and the interplay of taxation to your business goals and non-tax constraints. We work extensively on a wide range of tax questions, including the US tax aspects of cross border transactions, businesses and families, intergenerational (trust & estate) tax planning, tax aspects of business combinations (M&A), tax implications of various equity-based compensation structures, tax aspects of real estate and real estate partnerships, investment tax considerations, cryptocurrency tax questions, non-profit tax reporting obligations, small & mid-sized business tax structuring and audit & appeal (including appeals to the judicial level).
When it comes to clients, our focus is on the interplay of taxation to your goals and non-tax constraints. We want to understand the bigger picture of your tax situation to figure out how we can best leverage our expertise to your benefit. Our tax department is fully integrated with our other departments (Corporate and Trusts & Estates) so your non-tax goals can be attuned to potential tax considerations seamlessly and in real time.
Need Help? Contact us here.
Mergers & Acquisitions
Spencer legal has advised on over one billion dollars of M&A deals over the last nine years. Our practice is currently focused exclusively on non-public transactions and we work primarily with buyer-side although we have also worked with company sellers. Transactions structures are driven by various considerations from tax to regulatory to equity compensation to risk mitigation, and we are equally comfortable with stock or membership interest purchases as with asset acquisitions. Our practice has included a number of transactions involving mixed US and non-US assets and we work closely with local counsel to ensure integration of legal approach. While we’re potentially open to larger or smaller transactions, the two-to-fifty million dollar range is most strongly in our wheelhouse.
Most of our attorneys started their careers in “Biglaw.” Now we bring that level of detail and expertise to bear upon each transaction in order to craft and negotiate documentation that will accomplish the business objectives of your acquisition or disposition of business. Contact us today so we can see how we can help you not only close a deal but close the right deal!
Need Help? Contact us here.
Tax Consequences of ETH Exchange for ICO Tokens
Analysis (to the extent possible under limited authority) of potential tax consequences of exchange of appreciated Ethereum for ICO tokens in ICO. Review of potential application of S. 351 in the context of SEC application of the Howey doctrine to utility-token ICOs. Review of reporting requirements for 5%+ participants in ICO obtained with appreciated ETH and possible tacking of holding period and basis application for subsequent sales.
Like-Kind Exchange Principles Applicable to Cryptocurrency
Analysis and qualified advice on potential application of pre-2018 like-kind exchange rules to crypto-to-crypto swaps. Distinctions between different categories of cryptocurrencies. Work with outside contractor to develop bespoke software to track high-volume transactions (up to mm’s of transactions) tracing through original cost basis and transferred amounts and values in non-recombinant splitting of transfers with differing historical tax basis. Consideration of overwhelming reporting requirements for high-volume algorithmic traders and pro and con of need for voluminous paper filing on full range of trades.
Evaluation of Charitable Contributions of Highly-Appreciated Tokens
Evaluation of contribution of highly-appreciated cryptocurrency tokens to 501(c)(3). Obtaining a qualified appraisal for nontraditional asset class (ICO), analysis of tacked holding period for purposes of long term/short term character of contributed assets obtained through convoluted chain of asset ownership.
Preparing Tax Court Defense 10 Days Prior to Trial
Approached by client 10 days prior to scheduled Tax Court trial date. All-hands on deck preparation and presentation of full documentation and legal analysis. Presentation to Tax Court, subsequent negotiation with IRS Counsel and favorable negotiated settlement after renewing favorable negotiating position with defensible positions at trial.
Tax Planning for 1031 Partial Exchanges of Strip Mall
Tax planning for distribution of TIC interests and partial 1031 exchanges from certain ownership stakes of strip mall held in tiered partnership structure. Drafting LLC language and TIC agreement and reviewing transfer and dissolution documents RE: same.
Pre-IPO Planning for Non-US Company
Pre-IPO advice and liaison to appropriate boutique advisory shops for non-US enterprise contemplating US listing. International tax structuring advice on GILTI rules, interest allocation and optimal corporate structure for resulting Delaware HoldCo of non-US operational entities.
International Estate Planning Involving US Operations and RE Assets
Evaluation of different strategies for non-US holder of US operational assets and US real estate assets as portion of estate-taxable international holdings. Laying out benefits and disadvantages of various structural options and implementation of chosen strategy. Interplay of complexity of estranged spouse on title to certain assets on bequest planning.
Review of Historical Family Ownership Structure
Review and restructuring of family ownership structure of multiple operating entities including formalizing handshake agreements from original startup phase and establishing inter-generational planning for the various enterprises. Split of ownership between different operations to equalize out to prior agreement from differential titling.
Appeal of NOL Carryback on AMT Item
Appeal of technical aspects of AMT carryover of impact of NOL caused by Miscellaneous Itemized Deduction in subsequent year. Multiple layers of appeal and involvement of the Taxpayer’s Advocate office resulting in successful outcome for taxpayer on prior year refund.
Structuring Settlement Payments for Tax Savings
Multiple situations involving investigating potential structures of settlement payments for potential tax savings relating to applicable above-the-line statutory expense deductions, application of FICA, miscellaneous itemized deductions/pursuit of income determination and independent contractor determinations and potential expense apportionment possibilities.
Planning Around GCT Application to RE Held in S Corporation
Proactive tax planning relating to application of GCT on capital gains on NYC-based real estate held in legacy S Corp. Mitigation structures and details of implementation both for current year and for out-year’s planning. Trade-offs of tax savings against constraints on taxpayer behavior framed clearly for client.
Tax Efficient Structure for Panamanian Development
Analysis and recommendation for tax efficient receipt of payments and profits for US citizen developing real estate properties in Panama business zone. Application of S. 911 rules, debt and equity characterization and look-through vs. corporate taxation of profits on realization of project.
Structuring Silent Minority Investment
Structuring and documenting minority investment in small business for desired economic results and discretion of identities of parties and amounts at stake. Planning and implementation of same.
Application of 199A Regime to Cryptocurrency Receipts
Analysis of potential 199A deduction for receipts of income in and relating to cryptocurrency activities. Review of (limited) available literature on subject. Structuring income receipt via. entities to maximize deferral possibilities on retirement planning pre-filing deadline and advice on proper reporting for receipt of cryptocurrency income.
Tax Planning Involving US-UK Resident, Limited Companies and US CFC Rules
Tax analysis and strategic planning involving US citizen living in UK with multiple jurisdictional income streams. Interplay of sub-chapter S strategies with Limited Company strategies (HMRC) and implications of the application of CFC or FPHC rules to UK-based strategies, along with international discussions of multi-tier strategic individual tax planning.
Analysis of Proper Tax Reporting in Contested Estate
Discussions and analysis of proper tax reporting of ownership of property and entities in the context of ongoing litigation of probate of estate. Review of both tax rules and prima facie application of both EPTL provisions and application of trust documents in play with respect to entity ownership. Guidance on best course of action both in relation to tax reporting and to implications of tax reporting on Surrogate’s Court presentation of income and ownership information.
In-Kind Distributions through Tiered Partnerships for 1031 Transactions
Multiple transactions involving in-kind distribution of TIC interests through multiple layers of GP-LP partnerships in order to implement partial and/or parallel 1031 transactions. Drafting of partnership (LLC) agreement language to account for in-kind distributions, review of TIC agreements and analysis of IRS rules and rulings relating to distribution and later transfer for nonrecognition treatment under S. 1031.
Analysis of Like Kind Exchange Rules Applied to Divorcing Couple
Analysis of Like Kind Exchange and S. 121 exemption rules to property owned by a couple involved in cooperative divorce. Structuring of optimal tax savings approach to property given relative ownership and use period and potential structuring for TIC interests and parallel 1031 transactions.
State Tax Nexus for Deployed Civilian Contractor
Research and analysis of state tax nexus statutes in multiple states relating to domiciliary test for civilian contractor long-deployed in Afghanistan. Review of multiple state rules and weighing factors between different potential states on possible application of state-level tax to capital gains on sale of business property while overseas.
Research on New Self-Created Intellectual Property Taxation Rules
Research on conflicting laws relating to taxation of self-created intellectual property; memo presenting analysis based on maxims of statutory construction and legislative intent relating to new provision of law conflicting with remaining existing provision of law. Strategic advice to client RE: same.
Gift Transfer of NYC Real Estate Held in S Corporation Entity
Documentation and strategy relating to inter vivos gift of New York coop held through an S Corporation, gift tax implications and filings and creation of new unanimous written consent and by laws for family recipient.
International Estate Planning on RE Held Through S Corporations
Advice and planning relating to US real estate assets held in S Corporations by international family holding EU real estate as well. Domicile questions, allocations and implications of renunciation of status on testamentary transfers to US citizens. Optimization of US exemption amount in relation to overall international estate planning including application of international treaty network and credits for local estate taxes levied upon death.
Analysis of S Corporation Outside Basis Step-Up
Analysis and strategic advice relating to high-value real estate inherited via. ownership of S Corporation shares. Implications of sale of underlying property and distribution of assets on built-in gains and outside capital losses, intra-year netting and carry forward/carry back strategies, historical analysis of inside basis adjustments from date of death forward and implementation of dissolution mechanics to ensure recapture without tax slippage.
Application of Florida RPTT to Tiered Partnership
Analysis and advice relating to sale of upper-tier partnership interests in GP-LP structure involving Florida real estate and the application of real estate tax to transfers of upper-tier interests where lower-tier partnership held commercial Florida real estate.
FIRPTA Application to Renewables Project
Research and advice on application of FIRPTA to utility-scale renewable solar project. Analysis of percentage of project attributable to elements of project categorized as real property under FIRPTA rulings, advice to client RE: same.
Sale of Utility-Scale Renewables Project
Advice and tax structuring relating to the sale of three utility-scale solar projects. Internal vs. external basis, implications of flip structure involving tax equity involved in sale of primary interests, review of indemnity language, cash grant implications and negotiating tax aspects of $80m transaction.
International Allocation and Partnership Withholding
Structuring and analysis of a multinational services partnership in relation to ECI allocation and US withholding obligations under S. 1446 for non-US partners; advice on timing and procedural application for refund of over-withheld monies with respect to non-US partner.
Merger of New York State Non-Profit Corporation
Merger of New York State Non-Profit Corporation into out-of-state unaffiliated non-profit. Preparation and submission of petition for approval of merger to NY Attorney General’s Office, Charities Division, as well as petition for approval of dissolution. Negotiating and drafting merger agreements and ancillary documents relating to transfer of substantially all assets and personnel movement to new charity.
Analysis of Dealer Status on Sales of Parking Licenses
Analysis of capital gains or ordinary income characterization hinging on possible treatment of taxpayer as a ‘dealer’ in parking licenses where transfers occur in bulk to separate taxpaying entity after which subsequent transactions might occur at the retail level. Analysis of step transaction doctrine, related-party sales rules and attribution of activities under relevant case law.
Real Property Transfer Tax Application to Pre-Distribution Plan
Discussion, advice and documentation relating to distribution of units in development where initial investors had designated individual units for distribution at completion of construction but were prevented from fully binding transfer by restrictions of plan documents. Analysis of RPTT mere change of form of ownership rules applied to bespoke situation and best approach to documenting ultimate transfer of title.
Audit Relating to Partnership Outside Basis & Distributions
IRS audit relating to technical application of distributions in excess of outside basis from partnership. Discussions with taxpayer, research into historical outside basis records and recalculation of potential capital contributions unaccounted for in financial accounting. Discussions with IRS audit personnel relating to application of at risk rules and distribution taxability, preparation of penalty waiver request based upon reliance on previous tax return preparer.
Audit & Appeal of RPTT Rate Applied to Joint Cooperative
Audit & appeal (multi-stage through local tax tribunal) of application of bulk rate to contiguously-joined coop unit, research and presentation of administrative precedent and application of same to unusual fact pattern involving prior conjoined use followed by intervening separate use of physically connected units.
Real Property Transfer Tax on In-Kind Distribution
Numerous situations of in-kind distribution of promoter units and multi-promoter structures, application of mere change of form to varying factual situations as well as assumption of mortgage and mortgage recording tax in similar situations. Review of ACRIS documentation to conform with NYC and NY State RPTT rules and regulations.
Multi-Tier Partnership In-Kind Unit Distribution
Advice, structuring and drafting/implementation of multi-tier partnership distributions of sponsor units through multi-layers of entities containing different promote structures and LP investors at each level. Cross-drafting of language to ensure proper economic distribution while retaining confidentiality of investor base at each level, multi-tiered RPTT implementation and cash requirements to satisfy non In-Kind members.
In-Kind Distribution on Multi-Investor Development
Advice, structuring and implementation relating to multi-sponsor project requesting in-kind units to multiple sponsors. Detailed discussions of cross-credit issues, tax allocations of phantom income relating to leverage repayment, drafting language of distributions, operating agreements, real property transfer tax implications, waterfall of distributions of part-cash part-units as project progressed to completion.
In-Kind Unit Distribution for Promoter Interest
Advice, structuring and implementation of in-kind unit distributions in partial satisfaction of promote earned in mid-market development projects, including drafting tax allocation language and redrafting waterfall language to accommodate in-kind distributions as earned. Discussion of tax aspects both upon allocations in year of distribution, phantom income potential from pay-down of leverage and future tax consequences from inventory characterization. Our office has worked on numerous situations of this type with a variety of mid-market development firms.
Trust Accounting Challenge
Working with minor clients on obtaining an accounting over trust assets held by an adversarial party unwilling to provide information. Research on NY law, procedure and practical negotiations to obtain not only value of account, but specific investment portfolio and fee information.
Return Preparation
Individuals, Partnerships, S-Corporations, Estates & Trusts. Federal, State & Local. Structuring potential monetization transactions for a stranded short-term capital loss (individual taxpayer) including practical advice on implementation and counter-party pricing for viability analysis.
Advice for local chamber of commerce
Formation advice for local chamber of commerce re: tax-exempt status and formation entity, along with restrictions and tax implications of lobbying activity and referral services.
Bitcoin tax advice
Advice on tax implications of Bitcoin receipt in capital raise and usage of same in small business context.
US-German income tax treaty
Analysis of US-German income tax treaty, estate tax treaty and totalization agreement (Social Security tax treaty) for cross-citizenship couple with dual tax residency involving cross-border trusts, beneficiaries and generation-skipping transfer tax.
Structuring legal entities
Structuring legal entities for new joint ventures involving existing investments and potential new investments. Considered tax optimization, securities law concerns, and complex agreement drafting of payment waterfalls upon interim and liquidating distributions.
Advice on tax policy
Advice on tax policy implications of various legislative and regulatory proposals.
Implications of non-US investor
Analysis of implications of non-US investor taking position in the US on their non-US investment portfolio from a US tax perspective (PFIC analysis, MTM election, etc.)
US citizen living abroad
Optimal FTC analysis for US citizen living abroad prior three years. Conclusion that US filing not required, but voluntary US filing led to excess tax credit position that created tax savings for following several years with investment portfolio tax-optimization.
REMIC I/O Analysis
Analysis of individual taxpayer purchase of REMIC I/O strip with unforeseen and negative tax consequences. Guiding return preparer through corresponding entries and explanation for federal returns.
US filing requirements
Advice to US taxpayer noncompliant with US filing requirements for independent contractor income earned while living overseas. Retroactive filings and requests for penalty relief.
Analysis of tax implications
Analysis of tax implications of trust/prepayment options for private school tuition to accommodate non-tax requirements of divorcing couple to set-aside assets for schooling in most tax-efficient manner given respective personal filing statuses.