This is the subject of a presentation I gave in Boston, on March 10, 2010, for a meeting of The CEO Forum, a program of The Commonwealth Institute (www.commonwealthinstitute.org ). The presentation discussed various techniques that allow business, primarily owners of S and C corporations, to take out profits out of the business for their sole benefit of the owner. The topics covered included:
- Use of S Corporations and LLCs to use of for single level of taxation, pass-through of gains on sale of assets and avoidance of double taxation on dividends
- Use of S Corporations and LLCs to pass-through of ordinary losses to owners
- Use of S Corporations to avoid payroll taxes and enhance capital gains treatment
- Income splitting with family members in lower tax brackets
- Maximizing entertainment and travel expenses
- Lease of business assets to the company
- Age weighted profits sharing plans and deductible fringe benefit programs to enhance deductions
- Thinning new corporation by use of debt and corporate loans to owner
- Stock redemptions of owners
- Employee stock ownership plans
- Tax free separations and divisions of the business
- Charitable trusts on sale of stock to avoid capital gain on stock sale, to achieve life-time income from sale of stock and receive an immediate charitable deduction as well
There was also be discussion of avoidance of constructive dividends imposed by the IRS including payment of benefits to owners, payment of owner’s debts, bargain sales, bargain use of company property and IRS determined unreasonable compensation.
My presentation outline also includes discussion of merits of S vs C corporations and issues that arise in changes between those entities.
To read more, go to this LINK: https://robadelson.files.wordpress.com/2016/04/ceo-forum-maximizing-owner-return-from-business-3-10-10.pdf
If assistance is needed on maximizing your return, taking money out of your business as a closely held business owner, let me know.