Taxation of Business Operations
Caplin & Drysdale
Taxation of Business Operations

Caplin & Drysdale advises a wide range of businesses, however structured, on the taxation of their day-to-day operations.  We have extensive experience with a wide range of tax accounting, executive compensation and tax compliance issues that arise in the domestic and cross-border context, including withholding and reporting obligations for cross-border payments, the complex rules applicable to deferred compensation and the applicability of U.S. tax treaties.

Disputes and litigation with departing employees, partners, investors and deal counterparties are a fact of business life.  Many times these disputes involve or are informed by tax or partnership accounting issues.  Moreover, the tax consequences of damages and settlement payments need to be taken into account in resolving these disputes.  We have extensive experience in advising claimants, defendants and their attorneys on these issues.

Representative Engagements

  • When the managing partner of several domestic real estate partnerships was faced with a dispute over partnership accounting and tax issues with a major investor which escalated to threats of litigation and fraud claims, Caplin & Drysdale reviewed the partnership accounting and tax returns for the past several years and assisted in negotiating a settlement of the disgruntled partner's claims.

  • When an equity fund management company executive was forced out of her job, Caplin & Drysdale attorneys worked with her employment litigation team to interpret the management company’s partnership agreement in a manner that characterized the settlement in a tax favorable manner.

  • When the U.S. branch of a foreign company became enmeshed in a payroll tax dispute involving employee loans and the issue of whether particular persons were employees or independent contractors, Caplin & Drysdale worked with the client's human resources and tax staff and the employees' representatives to achieve a satisfactory resolution.

  • When the parties negotiating a settlement in an age discrimination class action were bogged down over tax issues, Caplin & Drysdale developed a method for allocating damages among wages, interest, and non-wage compensatory damages and determined an appropriate tax reserve, which allowed the settlement to proceed. We then determined the tax treatment of the fund that was established to pay damages to claimants and advised the fund trustees on federal and state withholding and reporting issues.

When the a business wanted to settle pending litigation in a tax-efficient manner, Caplin & Drysdale assisted in crafting a settlement under which most of the proceeds should be deductible, rather than capital expenditures, and counseled on reporting and compliance issues concerning the proceeds.

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