Scenario...

Message boards : Politics : Scenario...
Message board moderation

To post messages, you must log in.

AuthorMessage
keith

Send message
Joined: 18 Dec 10
Posts: 454
Credit: 9,054
RAC: 0
United States
Message 1071743 - Posted: 29 Jan 2011, 0:10:52 UTC
Last modified: 29 Jan 2011, 0:12:25 UTC

The owner of a family business producing widgets passes away. The business has been in the family for 30+ years as a sole proprietorship. The business has a value of assets of $50 million and employs 100 people locally and in delivery of product throughout the country.

Two sons and two daughters stand to inherit the assets of land the property sits on, manufacturing equipment, delivery vehicles and property equally ($12.5 million each). They've all taken part in running the business for between the last 7 and 10 years with their single surviving parent, the owner.

Upon disbursement of assets in the estate, they don't have the cash on hand to pay the state and federal inheritance taxes. Sale of the business or partial assets to pay the taxes could subject some or all of the employees to unemployment or the business to closure.

Some say, "they should of seen this coming". The family did see this coming. There weren't any good alternatives from the tax attorneys based on current law and business conditions.

What to do?
ID: 1071743 · Report as offensive
Profile soft^spirit
Avatar

Send message
Joined: 18 May 99
Posts: 6497
Credit: 34,134,168
RAC: 0
United States
Message 1071744 - Posted: 29 Jan 2011, 0:19:35 UTC - in response to Message 1071743.  

Anyone with that size of a company usually incorporates, leaving family members as share holders. The corporation would live on, owe taxes based on profits.

If someone was actually foolish enough to find themselves in that position, the answer is simple. Find a buyer for the property and lease it back. Write that off as a bad business decision.
Janice
ID: 1071744 · Report as offensive
Profile Robert Waite
Avatar

Send message
Joined: 23 Oct 07
Posts: 2417
Credit: 18,192,122
RAC: 59
Canada
Message 1071787 - Posted: 29 Jan 2011, 2:06:44 UTC

I always enjoy a giggle when scenarios like this come along.
The concern seems to be the plight of the poor employees by the way the story unfolds.
Yes, we better not allow that awful inheritance tax or all the working people will be out on the street. LOL

The bottom line is the family of the dead dude will still be filthy rich even after a tax of 75% on all monies, so don't weep for the poor little rich kids.
I do not fight fascists because I think I can win.
I fight them because they are fascists.
Chris Hedges

A riot is the language of the unheard. -Martin Luther King, Jr.
ID: 1071787 · Report as offensive
Profile Gary Charpentier Crowdfunding Project Donor*Special Project $75 donorSpecial Project $250 donor
Volunteer tester
Avatar

Send message
Joined: 25 Dec 00
Posts: 30608
Credit: 53,134,872
RAC: 32
United States
Message 1071841 - Posted: 29 Jan 2011, 5:14:50 UTC
Last modified: 29 Jan 2011, 5:15:29 UTC

What kind of corporation a C or an S?

In any case the only source of funds is the sale of the business. If it is a corporation finding a buyer is out as they aren't going to want to have a bunch of family still owning a chunk. Kids loose their jobs for sure and the buyer knows it is a fire sale. He'll offer ten cents on the dollar for the whole thing. Of course tax has to be paid not on the sale price but the appraised value. The IRS sees to that as they want to stop any kind of cheating or kickback scheme. It leaves the kids bankrupt.

As to finding a buyer, the IRS has a very short time period where the TAX has to be paid. Makes it hard to sell a business as a business, except at fire sale prices.

Now if they don't find a buyer then there is no choice but to immediately close [fire everyone] and auction off the assets. The $30 million in goodwill on the books goes out the door. The $20 million of book value tangible assets may sell for $10 million less the 10% auction fee. Tax man takes 75% and the kids split what is left and have to look for jobs.
ID: 1071841 · Report as offensive
Profile soft^spirit
Avatar

Send message
Joined: 18 May 99
Posts: 6497
Credit: 34,134,168
RAC: 0
United States
Message 1071842 - Posted: 29 Jan 2011, 5:17:45 UTC - in response to Message 1071841.  

If it is a corporation it is not part of the estate. It is its own entity by US law. There is no estate to settle.




Janice
ID: 1071842 · Report as offensive
Profile Gary Charpentier Crowdfunding Project Donor*Special Project $75 donorSpecial Project $250 donor
Volunteer tester
Avatar

Send message
Joined: 25 Dec 00
Posts: 30608
Credit: 53,134,872
RAC: 32
United States
Message 1071949 - Posted: 29 Jan 2011, 15:47:06 UTC - in response to Message 1071842.  

If it is a corporation it is not part of the estate. It is its own entity by US law. There is no estate to settle.

No wonder why we have the government we do when the people are so ignorant.

ID: 1071949 · Report as offensive
Profile soft^spirit
Avatar

Send message
Joined: 18 May 99
Posts: 6497
Credit: 34,134,168
RAC: 0
United States
Message 1071974 - Posted: 29 Jan 2011, 17:08:27 UTC - in response to Message 1071949.  

honest answers to ridiculous questions. NEXT!
Janice
ID: 1071974 · Report as offensive
keith

Send message
Joined: 18 Dec 10
Posts: 454
Credit: 9,054
RAC: 0
United States
Message 1072305 - Posted: 30 Jan 2011, 14:37:17 UTC - in response to Message 1071974.  

Then by definition, it's not a "family business".
Is that what you seek to do, ruin family businesses?
ID: 1072305 · Report as offensive
Profile Gary Charpentier Crowdfunding Project Donor*Special Project $75 donorSpecial Project $250 donor
Volunteer tester
Avatar

Send message
Joined: 25 Dec 00
Posts: 30608
Credit: 53,134,872
RAC: 32
United States
Message 1072329 - Posted: 30 Jan 2011, 15:58:17 UTC - in response to Message 1072305.  

Then by definition, it's not a "family business".
Is that what you seek to do, ruin family businesses?

I think she, like the majority of Americans, is simply ignorant of the realities of corporations. I doubt she or the average American could explain the difference between a C corp and an S corp, never mind an LLC. I doubt she or the average American could explain the differences between a publicly traded corp and a private corp. I know few Americans have a clue about the differences between a for profit corp and a not for profit corp.

So anyone want to tell us why the IRS has no issue with the president of a C corp taking a $1 a year salary but will prosecute the president of a S corp for doing that?

ID: 1072329 · Report as offensive
Profile Robert Waite
Avatar

Send message
Joined: 23 Oct 07
Posts: 2417
Credit: 18,192,122
RAC: 59
Canada
Message 1072487 - Posted: 30 Jan 2011, 23:39:59 UTC - in response to Message 1071743.  
Last modified: 30 Jan 2011, 23:40:27 UTC

The owner of a family business producing widgets passes away.

Keith
You are the one who started this string with this opening sentence.
I do not fight fascists because I think I can win.
I fight them because they are fascists.
Chris Hedges

A riot is the language of the unheard. -Martin Luther King, Jr.
ID: 1072487 · Report as offensive
keith

Send message
Joined: 18 Dec 10
Posts: 454
Credit: 9,054
RAC: 0
United States
Message 1072493 - Posted: 30 Jan 2011, 23:59:45 UTC - in response to Message 1072487.  

Why yes I did. My point being, inheritance tax can have a lot more impact than just getting the evil rich.

It threatens jobs and small businesses. You giggle at it. I don't find it funny.
ID: 1072493 · Report as offensive
Profile soft^spirit
Avatar

Send message
Joined: 18 May 99
Posts: 6497
Credit: 34,134,168
RAC: 0
United States
Message 1072497 - Posted: 31 Jan 2011, 0:06:12 UTC

The scenario is ridiculous. The assumptions inane. NEXT!
Janice
ID: 1072497 · Report as offensive
keith

Send message
Joined: 18 Dec 10
Posts: 454
Credit: 9,054
RAC: 0
United States
Message 1072514 - Posted: 31 Jan 2011, 0:49:34 UTC - in response to Message 1072497.  


Well, if you disapprove, then it definitely has to be a most awesome post!
ID: 1072514 · Report as offensive
Profile skildude
Avatar

Send message
Joined: 4 Oct 00
Posts: 9541
Credit: 50,759,529
RAC: 60
Yemen
Message 1072515 - Posted: 31 Jan 2011, 0:50:59 UTC - in response to Message 1072497.  

Sorry not sure if you are looking at this as the Woe is the rich. Those poor rich people always getting screwed over by having their rich parents die. Businesses are incorporated so that the individual ownership is no longer bound to an estate but can be sold to the children and no debt from inheritance occurs. the whole idea you put forward is that people should be able to perpetuate wealth. How about going out and earning it instead of expecting the family fortune to take care of you.


In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope
ID: 1072515 · Report as offensive
keith

Send message
Joined: 18 Dec 10
Posts: 454
Credit: 9,054
RAC: 0
United States
Message 1072523 - Posted: 31 Jan 2011, 1:08:47 UTC - in response to Message 1072515.  

Has the government gone out and "earned it"? No. The person who worked for the money earned it and should decide, above all others, where it goes.
ID: 1072523 · Report as offensive
Profile Es99
Volunteer tester
Avatar

Send message
Joined: 23 Aug 05
Posts: 10874
Credit: 350,402
RAC: 0
Canada
Message 1072559 - Posted: 31 Jan 2011, 3:56:50 UTC - in response to Message 1072523.  

Has the government gone out and "earned it"? No. The person who worked for the money earned it and should decide, above all others, where it goes.

Does that mean I have the right to with hold the part of my taxes that go to fund war?

Certainly if we are allowed to pick and chose where our money goes that would be the first thing I'd refuse to pay for.
Reality Internet Personality
ID: 1072559 · Report as offensive

Message boards : Politics : Scenario...


 
©2024 University of California
 
SETI@home and Astropulse are funded by grants from the National Science Foundation, NASA, and donations from SETI@home volunteers. AstroPulse is funded in part by the NSF through grant AST-0307956.