Tax Law and Business Organization Strategy : Texas Wind Energy Tax Lawyer & Attorney : Sprouse Shrader Smith Law Firm : Serving Amarillo and the Texas Panhandle

The staff of the Joint Committee on Taxation has released a comprehensive study on the business tax changes included in the President's FY 2010 budget proposal, as submitted to Congress on May 7, 2009.  For a list of the proposed business tax changes, read on.

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The Ninth Circuit has ruled that, where one of an ESOP's trustees was also the company's president, and on its board of directors, the trustees' “business decisions” leading to the payment of excessive executive compensation to the company president could constitute a breach of ERISA fiduciary responsibility to the ESOP. Johnson v. Couturier, (2009, CA9) 572 F.3d 1067. The court also ruled that ERISA preempted the indemnification agreements provided by the company to the president as a director and ESOP trustee.

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Notice 2009-59 updates the IRS' list of “listed transactions” published in Notice 2004-67, 2004-2 CB 600, by adding four transactions designated as listed transactions after the 2004 notice was issued. Notice 2009-55 carries a list of transactions designated as “transactions of interest” for various disclosure and penalty purposes.

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The Tax Court held that the taxpayers' ownership interests in limited liability partnerships (LLPs) and limited liability companies (LLCs) are excepted from classification as “limited partnership interests” under the temporary regulations by operation of the general partner exception. Thus, they could use all seven tests for material participation in the temporary regulations, instead of only the three available for participation of individuals that are limited partners.

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According to Gary Rosin, it is "when the legislature (bar committee?) forgets to check all the moving parts. See a discussion of the problem at his blog.

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Texas recently amended its LLC law, effective Sept. 1, 2009, to provide for series LLCs. More information, including a link to the enrolled version of the bill signed by the Governor, is on
the Unincorporated Business Law Prof blog.
 

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Steve Akers of Bessemer Trust discusses the Jorgensen case here. Make particular note of the things you should avoid if you want to have your family limited partnership respected for estate tax purposes, including:

• You need to have real and provable, non-tax reasons to form the FLP.
• You need to respect the FLP as a separate entity.
  • you must follow all the legal formalities.
  • you should keep business books and records.
  • you should make sure that partnership management has charge of the partnership's assets, including its checkbook
  • don't make disproportionate distributions particularly to pay personal expenses.

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Lisa Chavarria’s article on The Severance of Wind Rights in Texas was recently published on the Dallas Bar Association’s website. The article recognizes that there are questions about whether there is a severable real property estate consisting of wind rights. Legislative guidance may be necessary, particularly if the Texas courts don’t address this issue soon.

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Danny Robbins reports that many school districts have granted tax abatements for wind projects and the results are more income to the school districts. See, Texas Schools Get Millions from Wind Farm Deals. But those payments are in lieu of taxes instead of in the form of taxes. Therefore, the school districts do not include those receipts in the formula for determining the amount of tax revenues that they must return to the State of Texas to fund the statewide equalizing payments for education expenses. This has created a controversy explained in more detail in Robbins' article.

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