Photo of James Duffy

James Duffy

Subscribe to James Duffy's Posts

Jim is a partner in Taft’s Tax practice and practices principally in the areas of federal tax law; tax credit financing; individual, partnership and corporate tax planning; M&A; tax-exempt organizations and general commercial and corporate law.

Jim has been actively practicing in the area of the New Markets Tax Credits (NMTC) program since its inception in 2001. He has organized community development entities (CDEs) and represented CDEs, borrowers and other parties in structuring and closing numerous NMTC transactions. Jim also advises clients regarding Qualified Opportunity Zone matters.

Jim advises LLCs, partnerships, corporations and individuals in connection with the formation of new companies, mergers and acquisitions, formation of joint ventures, like-kind exchanges, ownership succession planning, and general business operations. These clients are involved in a variety of industries, including banking, venture capital, real estate, construction, consulting and investing.

Jim also advises charitable and non-charitable tax-exempt organizations, including health care entities, schools, religious and civic organizations. In addition to advising management of these organizations with respect to matters pertaining to general operation and maintenance of tax-exempt status, Jim has assisted clients in forming, restructuring and dissolving tax-exempt organizations, as well as forming donor- advised funds.

Prior to joining the firm, Jim worked at the law firm of Lewis Rice and Fingersh in St. Louis, Missouri, where he concentrated his practice in federal and state taxation. He also clerked for the Hon. Robert P. Ruwe of the U.S. Tax Court in Washington, D.C.

Contact:Read more about James Duffy

Content by Jim Duffy

The key advantage lies in the ability to avoid paying capital gains taxes on appreciated assets, such as real estate, stocks, or other investments. A donor can generally claim a charitable deduction for the full fair market value of the property. By contrast, if a donor sells these assets and contributes the sale proceeds, the donor would incur capital gains tax on the appreciation which would decrease the benefit of the deduction to the donor. However…

Continue Reading Did you know that the tax benefits of contributing property to a charity are often greater than donating cash?

Content by Jim Duffy

Generally, the tax consequences to a debtor of debt cancellation depend in large part upon whether the debt is recourse or non-recourse debt. Non-recourse debt is debt where the lender has no recourse against the borrower, but its remedy for nonpayment is limited to property that has been pledged or mortgaged to secure the debt. By contrast, a lender making a recourse loan may have a security interest in property of the debtor, but will also…

Continue Reading Did You Know that whether or not a security interest is perfected does not affect the tax consequences of debt cancellation?

In a prior installment of Did You Know, I described the benefits of Section 1202 stock. That section of the Internal Revenue Code allows taxpayers to exclude gain on the sale of qualifying stock from their taxable income in an amount equal to the greater of $10 million or 10 times their tax basis in the stock sold. A strategy known as “stacking“ may allow you to multiply the benefits of the $10 million gain exclusion.

Stacking refers to the…

Continue Reading Did You Know that you may be able to increase the amount of gain excluded on section 1202 Stock by gifting the stock to others?

Content by Jim Duffy

As you may be aware, when a corporation files an election to be taxed as an S corporation, all of the shareholders must consent to that election. If you live in a community property state, your spouse may be an owner in the corporation, even if he or she does not actually own any stock by name. The income tax regulations provide that when a stock of corporation is owned by a husband and wife as…

Continue Reading Did you know that your S election could be invalid if your spouse did not consent to it?

Content by Dave Bartoletti, Jim Duffy and Nathan Hagerman

As you may be aware, the Supreme Court decision in South Dakota v. Wayfair in 2018 substantially expanded the ability of states to require out-of-state sellers to collect and remit sales tax on sales into that state. Many companies that make sales into multiple states have found it challenging to maintain compliance with the sales tax requirements for all of the states into which they make sales. These liabilities have taken…

Continue Reading Did You Know a potential liability for failure to collect sales tax may not be covered by R&W insurance?

You can if it’s qualified small business stock (a.k.a. “1202 stock“) that you have held for at least six months. Section 1202 stock is stock in a qualified small business corporation (“QSBC”) that is acquired at original issuance. A QSBC is a C corporation that conducts a “qualified business” (e.g., no legal or medical services businesses, no finance, etc.), the gross assets of which are $50 million or less. For stock acquired after September 27, 2010, that is held for…

Continue Reading Did You Know that you can make a tax-free exchange of C corporation stock?

The sale of a C corporation business that is structured as an asset sale is subject to two levels of tax. There is a tax on the corporation (21% federal) and a tax on the shareholders when the sales proceeds are distributed (20% federal). By comparison, on a sale of stock, a shareholder is only subject to a tax of 20% (federal).

In some cases (admittedly not common), the goodwill of a business may be more appropriately treated as owned…

Continue Reading Did You Know that you may be able to reduce your tax on a sale of a corporate business by allocating part of the sales price to personal goodwill?

Content by Dimitrios Lalos (Minneapolis) and Nathan Hagerman (Indianapolis)

Effective July 1st, Minnesota instituted new Retail Delivery Fee obligations for sellers of product delivered into Minnesota to raise revenue for infrastructure and road improvements. Sellers with $1 million or more in retail sales must collect and remit to the Minnesota Department of Revenue, or pay themselves, a new Retail Delivery Fee of fifty cents per transaction that equals or exceeds $100 (before application of sales and use taxes) of taxable…

Continue Reading Did you know Sellers Must Collect a Retail Delivery Fee for Products Delivered to Minnesota Customers?

When a company sees its stock value drop, this can result in employees holding options that are “underwater“ or “out of the money“. This can significantly undermine the intended incentive effect desired by the employer in issuing the option.  For these reasons, employers might consider whether to reduce the exercise price on outstanding awards to equal the current market value of the stock, a.k.a. option repricing.

While there are various business impacts of repricing that will need to be considered…

Continue Reading Did you know that you can reprice underwater employee options without triggering tax to the employee?

Oftentimes when a partnership plans to sell real estate, some partners want to cash out while other want to roll over into other real estate tax-free.  The challenge is that if the partnership receives cash in part to pay to the partners cashing out, then all the partners would be taxed on their percentage of that cash. 

As discussed in a prior “Did You Know,” one way to do address this is through a “drop and swap.”  Another alternative is…

Continue Reading Did you know that you can cash out a partner in like kind exchange using an installment note?