Scott Dolson and Frost Brown Todd’s tax planning team have substantial expertise and experience handling tax planning for corporations, S corporation and pass-through entities, including choice of entity planning, equity compensation planning and M&A planning.

The tax planning team’s Section 1202 and Section 1045 work involves tax planning and implementation of planning ideas for founders, investors, venture firms, venture funds, PE firms, PE funds, family offices, wealth planners, investments bankers, accountants and attorneys, including (i) helping clients navigate through their choice of entity decision, and in particular their decision whether to operate as a C corporation with the hope of benefiting from the Section 1202 gain exclusion; (ii) helping client satisfy Section 1202’s and Section 1045’s eligibility requirements; and (iii) helping clients prepare for a potential future IRS audit by documenting their eligibility to claim the Section 1202 gain exclusion.

FBT’s QSBS practice encompasses the following:

Assisting businesses:

• helping them make choice of entity decisions
• converting partnerships (LLC/LPs) to corporations, along with related start-up tax planning
• restructuring their businesses that are operating as S corporations for the purpose of positioning owners to reap various business and tax benefits, including the Section 1202 gain exclusion
• providing tax advice and tax opinions, when appropriate, with respect to Section 1202 and Section 1045 issues
• advising founders, management teams and investors with respect to Section 1202’s and Section 1045’s eligibility and documentation requirements
• restructuring business assets and activities to attain and maintain qualified small business status, including businesses engaged in multiple activities or with operating through subsidiaries or joint venture investments
• advising them with respect to the interaction of equity compensation arrangements with Section 1202
• advising them with respect to the interaction of various equity and equity rights, including convertible debt, SAFEs, stock options, and stock grants with Section 1202
• providing Section 1202 and Section 1045 tax planning in connection with M&A transactions, including those involving equity rollovers
• helping companies formulate their communications with investors, including representations and covenants supporting QSBS eligibility

Assisting founders and service providers:

• advising taxpayers how to expand Section 1202’s usual $10 million cap on the gain exclusion
• planning for the rollover of QSBS proceeds under Section 1045, including utilizing newly formed C corporations for start-up activities or to serve as a vehicle to acquire qualified small businesses
• advising taxpayers with respect to remedying Section 1202 eligibility problem
• providing Section 1202 and Section 1045 tax planning in connection with M&A transactions, including those involving equity rollovers
• addressing gift and estate transfer issues, including working with Delaware and Nevada trusts and estate and trust counsel in various jurisdictions throughout United States
• advising them with respect to the interaction of equity compensation arrangements with Section 1202
• advising them with respect to the interaction of various equity and equity rights, including convertible debt, SAFEs, stock options, and stock grants with Section 1202

Assisting investors:

• documenting eligibility for claiming Section 1202’s gain exclusion or a Section 1045 rollover of QSBS proceeds.
• providing tax advice and tax opinions with respect to Section 1202 and Section 1045 issues
• advising taxpayers with respect to efforts to expand the basic $10 million or 10X cap on the Section 1202 gain exclusion
• addressing gift and estate transfer issues, including working with Delaware and Nevada trusts and estate and trust counsel in various jurisdictions throughout United States
• planning for the rollover of QSBS proceeds under Section 1045, including forming C corporations as vehicles for start-up activities and as acquisition vehicles

Assisting investment funds:

• QSBS planning for holders of carried interests, including tax opinions with respect to the sharing of Section 1202 gain exclusion by holders of carried interests
• QSBS planning for the holding of QSBS through LLCs/LPs
• documenting eligibility for claiming the Section 1202 gain exclusion
• planning for the rollover of QSBS proceeds under Section 1045, including the use of newly formed corporations as vehicles for start-up activities or as vehicles for acquiring a qualified small business

Assisted business owners with their business succession planning, culminating in ESOPs, sales to family members, management or other investors, or to outside financial or strategic buyers.

Handled or managed M&A work for financial buyers acquiring targets in a variety of industry areas.

Assisted PE firms with development of their internal and portfolio company governance and compensation documents.

In connection with handing M&A work for business owners, assisted with structuring and implementing tax favored equity rollovers, including the tax and governance (minority owner) issues.

Developed and coordinated both general and specialized due diligence projects for lower-middle and middle market PE firms (e.g., an immigration-focused due diligence investigation of a Southwest US construction general contractor which utilized a network of independent contractors with their own construction teams).

Managed the firm’s outside general counsel services for PE firms’ portfolio companies (with legal needs ranging from managing world-class IP portfolios to negotiating collective bargaining agreements).

For a leading skilled nursing and personal services company, developed and implemented a specialized and comprehensive due diligence examination of a target company’s independent contractor arrangement.

Handled the structuring of numerous real estate development projects involving industrial or commercial properties, including associated partnership tax planning and LLC governance issues, in transactions often involving property owners, developers and investors.

Handled tax and business issues associated with the conversion of a closely-held LLC to a public company, including the roll-up of franchisee stores.

Handled transactions involving a Heisman Trophy Winner, an NFL Hall of Fame member and Super Bowl champion, a Triple Crown winner, and a PGA player of the year.

Advised numerous clients regarding LLC controlling and minority governance and fiduciary duty issues.

Structured and drafted hundreds of closely-held business, investment, family business and wealth and real estate investment and development limited liability companies.

Advised clients in connection with their tax planning, including structuring closely-held business and investment arrangements and transaction tax planning.

Advised clients in connection with the organization and operation of employer assistance organization public charities and other employer assistance vehicles.

Health Care: home health, personal care, nursing homes, drug treatment clinics, pharma (cancer; macular degeneration), and hearing aid manufacturer and retailer.

Manufacturing: environmental cyclones, after-market automobile parts, chemical storage tank, specialty glass, and metal fabricating.

Entertainment and hospitality: numerous fast-food and casual dining restaurant concepts, including Long John Silvers and Texas Roadhouse, hotels, minor league baseball team, racetrack and gaming operations, and sports and entertainment agencies.

IP/software: blue tooth company, printing, direct mail, developer of optical cables and engines, various software developers and licensing companies, and e-commerce B2B and B2R businesses.

Insurance: title insurance, surety bond, bail bond and general lines agencies and surety bond underwriters.

Retail: convenience stores, specialty pet products, equine, personalized apparel, auto dealerships, funeral homes and printing houses.

Advertising: general advertising agency and auto industry direct marketing.

Construction and real estate: general contractors, asphalt plants, replacement windows, ready-mix concrete, numerous industrial and commercial property projects, rock quarries, underground and surface coal mining and oil and gas.

Waste: waste collection, landfills, metal recycling and hazardous waste incinerators.

Professional: lawyers, accountants and physicians.