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December 1, 2008

Advising Financially Dis-Stressed Corporations

#Tax Advisor, #2008 Archived

We've all been there... You have a client with a tax question that you could not answer. The combination of reduced credit availability and economic downturn has left many of your business clients scrambling to assess their options and their tax impact on a variety of issues. You could spend valuable time researching the answer and maybe get the right answer or refer the client to another full-service firm, never to return. Is there a better way to Cover Miles in Minutes® with a Board Certified Tax Advisor dedicated to helping you build your practice in these difficult times? Do you need expertise in the following matters?

  • Taking Advantage of Lower Asset Values to distribute assets tax advantageously to corporate shareholders
  • Modification, restructuring, exchange or cancellation of debts, with creditors or corporate insiders
  • Default and/or insolvency
  • A Reorganization of capital structure
  • The voluntary or involuntary transfer of property, such as by property foreclosure
  • Bankruptcy and/or complete liquidation
  • Acquisition of Insolvent Business Entities with tax benefits, such as net operating losses, credit carry forwards and the like

Whether your client is an S Corporation, a C Corporation or a Limited Liability Company (or a mixture of the above), the resolution of these particular issues involves complex tax issues.

Is the current status of the entity right for your client now or in the future? Can this be changed without the loss of tax benefits

Many times the resolution may result in ordinary income, capital gains, tax-deferred income, excluded income or even deductions. The owners may owe tax now or in the future or not at all. Can the capital losses or net operating losses be recouped or are they lost forever? Certain taxes, such as payroll taxes and sales taxes attached personally to the owners of the enterprise, should be paid at all costs.

In bankruptcy, where the debtor's debt is cancelled, there are a number of tax issues that must be dealt with, such as:

  • Which tax attributes should or can be reduced first, and which should be reduced last?
  • If the discharged debt is non-recourse, the transaction is treated as a sale of the property.
  • If the discharged debt is recourse, the transaction is split between a sale and cancellation of debt for the excess over the fair market value.

Partnership with Robison Tax Law means providing your clients with timely expert tax advice to best meet their tax needs. We stay up-to-date so you don't have to. How can you get started? Contact us at 513.412.3483 or email us at

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