Taxes for business owners can be thoroughly confusing, particularly when one of the owners decides to retire.
The tax consequences for a retiring owner and for the remaining owners differ considerably, depending on how the retirement payments are classified for federal income tax purposes. However, those consequences are not set in stone. The parties have some flexibility in classifying retirement payments, but the agreements must be properly drafted.
Payments to a retiring owner to liquidate his or her ownership interest can have tax consequences on the retiring owner as well as the remaining owners. Whether you’re looking to create a partnership, LLC or corporation, or amend an existing agreement among the owners, we can help you draft retirement provisions that provide the most benefit to all involved.
Ending a business relationship can be emotionally and financially complicated, whether it ends because of the retirement of an owner or termination for another reason. How and when the relationship is terminated can have distinctly different tax consequences.
We help our clients work within existing tax guidelines to maximize the benefits for both retiring owners and remaining owners. We can do the same for you.
We welcome the opportunity to meet with you to evaluate your partnership or shareholder agreement to make sure it does precisely what you want it to do. Please contact us if you would like to schedule an appointment to discuss your needs and how our firm can help you.