Planning is key throughout the life of your business—from start-up and growth to restructuring or sale. These deals can be complex, and you need experienced attorneys, certified professional accountants, and certified financial planners to achieve your financial goals.
At Frost Law, our business law team serves as a key partner for entrepreneurs considering their financial strategies. We combine tax and corporate law experience to structure deals that limit risk and maximize financial effectiveness. These are some of the more common types of business transactions that Frost Law can help with.
Contact Frost Law at (410) 497-5947 to discuss the financial future of your business.
Mergers and acquisitions (M&A) are transformative events that can redefine a company's market position. They also carry substantial risks if not properly vetted and structured.
Successful M&A activity requires a legal team that understands both the technical and mechanical aspects of the transfer and the economic drivers behind the deal. This process involves rigorous due diligence, valuation analysis, and the negotiation of definitive agreements that protect your interests post-closing.
Frost Law assists clients with the types of business transactions below. We focus on identifying potential pitfalls early in the process—such as hidden liabilities or unfavorable tax structures—so that you can make informed decisions. By coordinating with your financial advisors and accountants, we ensure a seamless transition that preserves the value of the assets or equity being exchanged.
A corporate division allows a company to separate a portion of its business operations into a new, independent entity. This is often done to sharpen strategic focus, separate distinct business lines, or prepare a specific division for a future sale.
These specific methods of divestiture involve distributing stock of a controlled corporation to existing shareholders, either pro rata or in exchange for their current shares. We guide clients through the strict requirements to ensure these transactions qualify for tax-advantaged treatment whenever possible.
Joint ventures allow two or more businesses to pool resources and expertise for a specific project while maintaining their distinct legal identities. We draft robust operating agreements that clearly define capital contributions, management rights, profit sharing, and exit strategies to prevent future disputes.
When a business faces insurmountable financial distress, swift legal action is necessary to manage creditor relationships and mitigate personal liability for directors and officers. Frost Law advises on restructuring options and negotiates with stakeholders to find the most viable path forward for the entity.
Liquidation involves the orderly winding down of a business's affairs, converting assets into cash to pay off debts and distributing the remainder to shareholders. Our team ensures that this process complies with state laws and tax regulations to avoid "transferee liability" for the recipients of the distributions.
In a taxable asset acquisition, a buyer purchases individual assets of a target company rather than its stock, allowing the buyer to "step up" the basis of the assets for tax purposes. We help structure these deals to maximize depreciation benefits for the buyer while managing the tax impact for the seller.
A taxable stock acquisition involves purchasing the ownership interest of a company directly from its shareholders. This structure is often simpler than an asset deal but requires careful due diligence regarding the target company's historical liabilities, which the buyer inherits.
Business reorganization is a powerful tool for aligning a corporate/business entity structure with evolving business needs, often driven by the desire to improve operational efficiency or prepare for a major transaction. However, the Internal Revenue Code imposes strict continuity of interest and business enterprise requirements that must be met to avoid triggering immediate tax liabilities. A well-planned reorganization can streamline management and reduce administrative burdens without disrupting day-to-day operations.
We have experience in designing reorganization plans that adhere to statutory requirements, ensuring that the exchange of stock or assets remains a non-taxable event. Our attorneys analyze your current corporate flowchart and propose adjustments that facilitate growth or succession planning. If you're planning any of the reorganization types below, our experienced attorneys can provide the technical blueprints necessary for a compliant transition.
Commonly referred to as a "Type B" reorganization, this involves the acquisition of one corporation's stock solely in exchange for voting stock of the acquiring corporation. We assist in structuring the exchange to ensure control requirements are satisfied and tax deferral is preserved for shareholders.
These transactions, often known as "Type C" or "Type D" reorganizations, allow a corporation to acquire another's assets in exchange for its own stock without immediate tax consequences. We ensure that the specific statutory requirements regarding the transfer of "substantially all" assets are met.
Triangular mergers involve the use of a subsidiary to acquire a target company, isolating the parent company from the target's liabilities. We can help with "substantially all" asset tests and control requirements that distinguish forward triangular mergers from reverse triangular mergers.
Selling a business is often the culmination of years of hard work, and the structure of the sale dramatically impacts the net proceeds that you walk away with. Many aspects of a deal can create tension between a buyer and seller (e.g., asset sale vs. stock sale, or current vs. deferred payments). We advocate for terms that protect your financial legacy while facilitating a smooth closing.
Our involvement with your business sale begins well before the letter of intent is signed, helping you prepare the company for sale and organize due diligence materials to present the business most favorably. We draft and negotiate the purchase agreement, focusing on critical provisions such as indemnification caps, baskets, and earn-out mechanisms. Our goal is to minimize post-closing risks and ensure you receive the full value of your enterprise.
Most business exits are taxable events where the seller recognizes gain or loss on the difference between the sale price and their tax basis. We analyze the allocation of the purchase price to different asset classes to optimize the tax outcome for our clients.
A cash sale provides immediate liquidity and certainty of value at closing, eliminating the risk associated with taking buyer stock as payment. We ensure that the funds are properly escrowed and distributed, and that any holdbacks for potential indemnity claims are fair and time-limited.
The Research & Development (R&D) tax credit is a powerful federal incentive designed to reward companies for improving their products, processes, or software. It offers a dollar-for-dollar reduction in tax liability, yet many businesses underestimate their eligibility, assuming R&D is limited to laboratories and scientists. Our team helps identify qualifying activities across various industries, ensuring that your innovation translates into tangible tax savings.
We conduct thorough R&D studies to substantiate claims, calculating the credit accurately to withstand IRS scrutiny. This involves analyzing employee wages, supply costs, and contractor payments associated with development efforts. By documenting the connection between expenses and qualified research activities, we maximize the credit's value while maintaining strict compliance with the Tax Code. These are some important factors to consider with the R&D tax credit, and how we work to establish your claim.
We assist businesses in reviewing their fixed asset schedules to identify items that may qualify for immediate expensing or accelerated depreciation in conjunction with R&D activities. Proper classification can significantly improve cash flow by front-loading tax deductions.
Optimizing accounting methods for R&D expenses is crucial for maximizing the credit; we advise on whether to capitalize or expense research costs based on your specific tax situation. Strategic changes in accounting methods can often unlock retroactive benefits.
If your business has performed qualified research in previous years but failed to claim the credit, we can prepare and file amended returns to recapture those missed opportunities. This allows companies to recover overpaid taxes from prior years, providing a welcome injection of capital.
Claiming the R&D credit can sometimes invite IRS scrutiny, which is why we provide robust audit support to defend your claim. Our attorneys are experienced in communicating with tax authorities and presenting the necessary documentation to substantiate your research activities.
For start-up companies that may not yet have income tax liability, the R&D credit can be applied against payroll taxes, providing immediate liquidity. We guide early-stage ventures through the specific election requirements to utilize this benefit effectively.
The Qualified Opportunity Zone (QOZ) program offers significant tax incentives for investors who reinvest capital gains into designated low-income communities. By rolling over gains into a Qualified Opportunity Fund, investors can defer taxes on those gains until 2026 and potentially reduce the original tax bill by up to 15%. (Note that new investments generally are not eligible for the full 15% benefit.) This program is designed to spur economic development while providing tax-efficient wealth accumulation for investors.
Our firm advises clients on the formation and operation of Qualified Opportunity Funds, ensuring strict adherence to the asset and income tests required to maintain compliance. We help structure investments in QOZ businesses and property to maximize the long-term benefit: if the investment is held for at least 10 years, any appreciation on the Opportunity Zone investment itself is entirely tax-free. Navigating these regulations requires precise timing and structural foresight to avoid inadvertently disqualifying the investment.
While federal incentives often grab the headlines, state and local tax credits can provide substantial relief that directly impacts a company’s bottom line. These programs vary widely by jurisdiction and are often underutilized due to the complexity of their application processes. We actively monitor the changing landscape of state tax legislation to identify niche credits that align with your business footprint.
From film and entertainment production incentives to enterprise zone credits, we help clients capture value that might otherwise be left on the table. Our team handles the necessary compliance assessments and filings, ensuring that you meet all statutory requirements to monetize these credits. We view state tax planning as an integral part of a holistic tax strategy, not just an afterthought. We've included some example state credits below.
Many states have enacted Pass-Through Entity (PTE) taxes as a workaround to the federal State and Local Tax (SALT) deduction cap. We advise S-Corps and partnerships on making these elections, allowing the business to pay state taxes at the entity level and pass the full benefit to owners.
Specific jurisdictions offer property tax relief to small retail businesses to encourage local commerce and alleviate overhead costs. We assist eligible retailers in applying for these credits, helping to verify qualification based on revenue thresholds and location.
Beyond state-level programs, many municipalities offer local tax credits for job creation, historic preservation, or environmental improvements. We research local ordinances to find available incentives that support your specific business activities and location.
Effective estate planning for business owners goes beyond simple wills; it involves sophisticated strategies to transfer wealth while minimizing estate, gift, and generation-skipping transfer taxes. We work with clients to design comprehensive plans that ensure business continuity and asset protection for future generations. This often involves the use of trusts to manage complex assets and control the timing of distributions to beneficiaries.
Our attorneys understand the intersection of family dynamics and tax law, creating structures that reduce friction and tax liability. We provide counsel on funding trusts, valuing business interests, and navigating the probate process. Whether you are looking to freeze the value of your estate or provide for charitable causes, we tailor our approach to your specific legacy goals.
This strategy allows a seller to defer capital gains taxes on the sale of a highly appreciated asset by selling it to a trust in exchange for an installment note. We structure these trusts to provide a steady stream of income while spreading the tax liability over future years.
We advise on the formation and qualification of private REITs, which can be an effective vehicle for holding real estate assets in a tax-efficient manner. REITs offer the benefit of avoiding double taxation on corporate income if strict distribution requirements are met.
The landscape of business tax law includes numerous provisions that can be leveraged for significant advantage or, if ignored, can lead to compliance issues. Our practice covers the full spectrum of these niche topics, ensuring that no angle is overlooked in your tax planning. Some common examples of these tax areas are below. We pride ourselves on our ability to handle the "obscure" sections of the tax code that general practitioners might miss. Our goal is to provide a comprehensive tax roadmap that accounts for every variable affecting your business's financial health.
Section 1202 allows for the potential exclusion of up to 100% of the gain from the sale of Qualified Small Business Stock (QSBS) held for more than five years. We help founders and investors structure their entities to ensure their stock meets the specific issuance and active business requirements.
A Section 1031 exchange allows real estate investors to defer capital gains taxes by swapping one investment property for another "like-kind" property. We guide clients through the strict identification and closing timelines required to successfully execute these tax-deferred exchanges.
The 83(b) election is a critical decision for founders receiving stock subject to vesting, allowing them to pay taxes on the current value rather than a higher future value. We ensure these elections are filed within the strict 30-day window to lock in significant potential tax savings.
The IRS may collapse a series of separate steps into a single transaction for tax purposes if they are viewed as part of a unified plan. We analyze multi-step transactions to mitigate the risk of the "step transaction doctrine" triggering unexpected tax liabilities.
These complex rules attribute stock ownership from one person or entity to another (such as between family members), impacting tax outcomes in redemptions and reorganizations. We carefully analyze family and entity relationships to determine how these constructive ownership rules apply to your specific situation.
Depending on the circumstances, the IRS requires certain S corporations to pay "reasonable" compensation to one or more of their shareholders before taking distributions. We provide formal opinions and market analysis to justify compensation levels, protecting you from potential payroll tax penalties.
For many businesses, hiring a full-time in-house attorney is not cost-effective, yet the need for ongoing legal guidance is constant. Our General Counsel services bridge this gap by providing on-demand advice for day-to-day operational issues and strategic decisions. We act as an extension of your management team, identifying legal risks in real-time before they escalate into costly litigation.
From reviewing vendor contracts to advising on corporate governance, we provide the practical legal infrastructure that allows your business to scale with confidence. We understand that legal advice must be actionable and commercially viable, not just theoretical. Our attorneys build long-term relationships with clients, gaining a deep understanding of their industry and culture to offer tailored advice that supports sustainable growth.
We provide comprehensive advisory services throughout the deal lifecycle, from initial valuation and structuring to post-merger integration. Our role is to serve as a sounding board for leadership, validating assumptions and challenging strategies to ensure the deal makes financial and legal sense.
Properly classifying an infusion of capital as debt or equity is critical for tax deductibility of interest and avoiding recharacterization by the IRS. We draft formal opinions analyzing the specific factors of the instrument to support the intended tax treatment.
Closely held corporations must be careful that payments to shareholder-employees or personal expenses paid by the business are not reclassified by the IRS as non-deductible dividends. We help implement policies and documentation to substantiate business expenses and reasonable compensation.
We assist in drafting essential internal policies, including Social Media Policies, Data Privacy protocols, and Confidentiality Agreements, to protect company assets and reputation. These documents establish clear expectations for employees and provide a legal defense in the event of a breach or dispute.
The complexity of modern business transactions means that even minor oversights in drafting or due diligence can lead to significant financial exposure or lost opportunities. It is difficult for business owners to focus on growth and operations while simultaneously trying to navigate the intricate web of corporate and tax laws.
Talk with our team of business attorneys today, who can draw on their experience to help you better understand the legal mechanisms available to protect and grow your enterprise. Our attorneys possess a deep understanding of the latest regulatory developments and can help you identify strategic advantages that you might not be aware of.
Schedule a confidential consultation with our team at Frost Law by calling (410) 497-5947 or filling out our contact form so we may help you execute your next business transaction with confidence.
