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Buyout Funding and Death Benefits

By Lawrence L. Bell
September 02, 2015

Professional service organizations traditionally have elected a pass thru entity status (S Corp., LLC, LLP, partnership) in order to reduce double taxation at the principal's level. Similar additional taxation may occur with C Corps. and accumulated earnings tax as well as other confiscatory grabs. These issues create an impediment for the current accumulation of funds to satisfy a principal's buyout in future years.

The most senior principals do not have the security of knowing the money will be there for their buyout in the future ' and they are not happy.

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