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…

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…

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…

When an S corp seeks to wind up its affairs by selling assets in an installment sale and then liquidating, the distribution of the note along with other property (e.g., cash retained or downpayment) can trigger unintentional acceleration of tax on the deferred gain.

The Internal Revenue Code provides that an S corp may distribute an installment note to its shareholders in liquidation without triggering tax on the deferred gain from the note. However, for those seeking to take advantage…

Beginning in 2022, businesses are now required to capitalize specified research and experimental expenditures  (“SRE expenditures“) and amortize (deduct) them over time.  Expenditures attributable to domestic research are amortized over five years and expenditures attributable to foreign research are amortized over 15 years.   SRE expenditures are generally research and development costs in an experimental or laboratory sense for product development or improvement and include software development costs.

If the property with respect to which the SRE expenditures are being amortized…

As you probably know, in a like-kind exchange, any sale proceeds that you do not apply to purchasing a new investment property will be taxable (up to the total gain on the property). The challenge with making a like-kind exchange of property in a seller-financed sale is that the seller doesn’t receive any (or very little) cash at closing.  As a result, even if the seller rolls that cash over into a new property, subsequent payments received on the note…

A common structure in the acquisition of the assets of a business is for the seller to receive equity from the acquirer in addition to cash. Receipt of a partnership or LLC interest in exchange for property is generally non-taxable. A seller can obtain substantial tax savings by deferring gain on the low-basis assets by specifying in the agreement that specific high-basis assets will be sold for cash and that certain low-basis assets will be exchanged for partnership interests. 

To…