(52) In these situations, particularly in closely held corporations
, where the mere presence of a disinterested director will not overcome strict dominance, the legal decision to run the statute of limitations should not depend on such a singular presence.
Following a discussion of the probate process, the authors discuss business continuation issues for each form of business from proprietorship to the closely held corporation
. This is followed by a discussion of postmortem estate preservation planning topics.
Passive Activity Losses for Closely Held Corporations
A fair market value analysis determines the value of closely held corporation
shares by asking what someone would hypothetically pay for those shares.
''It's the first time that our court has said that a closely held corporation
has the rights of a person when it comes to religious freedom.''
A closely held corporation
may use equity-based incentives to recruit a talented executive to its management ranks, to compensate an executive for her management services, or to align the executive's interests with those of the corporation's shareholders.
Fortunately, many states have enacted laws that relax nonessential governance requirements for closely held corporations
. Such laws permit operation without a board of directors, broad use of shareholder agreements, waiver of annual meetings, and execution of documents by a single person acting in more than one capacity, such as chairman of the board and president.
According to Donahue, most closely held corporations
are "really like partnerships, between two or three people who contribute capital, skills, experience and labor." (20) In the court's opinion, the relationship among the stockholders in a close corporation is just like that of partners in a partnership; meaning that if the enterprise is to succeed, then the relationship must be one of "trust, confidence and absolute loyalty." (21)
Taxpayers should be sure to provide evidence of stock valuation in closely held corporations
based on the worth of the underlying property.
Generally speaking, for tax related matters, the standard of value for closely held corporations
is fair market value.
Defining this minimum degree of control has been particularly difficult in cases involving employee-shareholders of closely held corporations
It is not unusual for small, closely held corporations
to secure their initial capital entirely from a bank or other third-party financing, secured by the shareholders' personal guarantees.