(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 CorporationsA 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.
