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Why Worry About Corporate Tax Structure

June 28, 2010

Last month I pointed out that there are significant disadvantages to forming what is called a C Corporation.  That’s what most of us think of as a regular corporation, a corporation that files tax returns for its own income and losses and pays taxes at a corporate rate, not an individual rate. One... Read more »

Mouse in a Barrel

June 1, 2010

Like many lawyers I often suggest that clients with a small business, such as a motorsports dealership, incorporate. However, if you incorporate and do not make a special election to be taxed as an S Corporation (where the shareholders pay the taxes on corporate profits) your corporation will be a separate... Read more »

Thoughts on how to transfer a dealership to a family member

March 5, 2010

For the past several of months we have talked about creating different classes of equity for the purpose of granting different economic rights and different control rights to various owners of a company. The advantages of such a flexible equity structure are readily apparent when dealing, for example,... Read more »

Ways to attract outside investors to a dealership

February 5, 2010

Recently my blogs have addressed the question of various types of equity ownership interests in motorsports dealerships. For example an incorporated dealership could issue common stock and preferred stock, with preferred stock representing a first claim on the earnings of a company and common stock representing... Read more »

Stock options for dealers to consider

January 5, 2010

Last month our blog addressed the issues of using different kinds of equity, for example issuing a preferred class of stock to one shareholder or a group of shareholders and a junior or common class to other shareholders. Comments about equity participation also apply to control. Many people tend to... Read more »

Understanding dealership minority ownership interests

December 11, 2009

For a variety of reasons, a dealership may find it advisable to sell minority ownership (equity) interests to one or more new owners: a junior partner, a key employee, an outside investor or a family member for example. When doing this, there is a tendency to think of all corporate stock as being the... Read more »

Separating operating assets from real property

October 7, 2009

Powersports dealers should understand the importance of separating dealership assets (inventory, accounts receivable, shop equipment, etc.) from real estate (the dealership building and surrounding land, including parking areas).  Of course, many dealers own only the operating assets and lease the real... Read more »

Protecting the Corporate Veil

September 11, 2009

In my experience, most dealerships are incorporated. The primary reason to incorporate is to have the protection of limited liability. That means the corporation, not its individual shareholders, is liable for the company’s debts and other actions (except when, on a bank loan for example, the shareholders... Read more »

Estate planning in tough times

August 10, 2009

One of the few benefits of hard times is the opportunity to make large tax-free estate planning transfers. In any tax year you can transfer $13,000 of cash or property to each of any number of individuals. If you have five children, you can make five $13,000 transfers. If your spouse joins in the gift,... Read more »

A Vital Element When Catastrophe Happens

July 13, 2009

Although many people never think about it, the biggest reason for forming a corporation is to protect the individual owner from personal liability for corporate acts. In the everyday business world, banks, landlords and other smart people get personal guarantees for corporate debts, leases and other... Read more »

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