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Till Death Do Us Part Just Got More Expensive In The Business World

July 08, 2024

The US Supreme Court recently published decisions which will have an impact on the business world moving forward.  We thought it would be good to spend the next few weeks reviewing a few of them that directly impact the business world. 

The first case is Connelly v. United States.  It involved valuing a closely held business when dealing with estate taxes and a related obligation to repurchase the equity from the deceased shareholder.  Prior to this decision, the redemption would be treated as a liability for the company, thereby lowering its value.  However, the Court held that is not the case any longer. 

By way of background, a company will typically buy key person life insurance for the owners.  On death of an owner, the insurance proceeds would be used to redeem the equity by the company.  The Court said the proceeds of the insurance actually increase the value of the company and apply that to the value of the deceased owner’s equity (i.e., higher estate tax). 

There are approaches to mitigate this situation that your professional business advisors can assist with.  I guess “Till Death Do Us Part” just got more expensive if you are a business owner. Next week, we will review Moore v US, which involves repatriation taxes of a foreign owned business.  After that, we will take on the overturning of the Chevron decision
 
Other items of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.   

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