Our Tax Department provides services to a wide range of corporate, partnership, non-profit and individual clients. The department’s areas of expertise include all aspects of federal, state and international tax matters. The nature of the services rendered includes:

• Sophisticated technical tax advice on specific tax issues in the larger, overall context of a major business transaction.
• Structuring corporate mergers and acquisitions.
• Structuring partnerships, limited liability companies and S corporations in connection with both the start-up of a new business, as well as the restructuring of an existing business.

Additionally, we represent high-net-worth individuals and their closely held companies. We also regularly represent clients in a wide variety of tax controversies, such as income, estate tax and gift tax issues at the federal and state level, as well as sales and use tax and property tax issues at the state and local level.

Employee Stock Ownership Plans (ESOP)

The ESOP Practice at MS&K offers a technological proficiency and practical experience that is second to none. Our ESOP attorneys have been involved in the customized design and implementation of over 1,000 ESOPs for companies throughout the United States. On our team is the attorney who designed the structure for the original ESOP and who has drafted California and federal ESOP legislation. We regularly handle the feasibility analysis, transaction design, implementation and continuing consultation for a wide variety of types of ESOP transactions. We represent banks and other lenders in ESOP transactions, corporate and individual ESOP fiduciaries and ESOP plan administrators. In addition, we serve as expert witnesses in ESOP related litigation.

ESOP Uses

An ESOP is a unique business, financial, tax and succession planning tool. It is a qualified employee benefit plan – similar to a pension or profit sharing plan – and is designed to be invested in the Company's stock and for which one can borrow on a pre-tax basis to pay for the stock. A successful ESOP requires a unique blend of legal disciplines that include employee benefits, corporate, estate planning, financing, securities and tax law. Its versatility enables it to provide solutions to a wide variety of business and personal issues, such as these:

• Creates a market for the stock of closely-held corporations whereby the owners can sell part or all of their stock to the employees with significant tax benefits to the owners, the corporation and the employees.
• Provides a flexible vehicle for the buyout of minority shareholders in situations such as retiring or deceased shareholders, dissident shareholders, divorce settlements and the buyout of groups of former employees who have received stock during their employment.
• Provides a strategy for owners of closely-held businesses to accomplish estate planning objectives, provide for business succession and obtain meaningful tax benefits.
• Provides pre-tax financing for the purchase of plant and equipment and other corporate expansion projects while, at the same time, providing a valuable employee benefit.
• Can be used in corporate acquisitions to facilitate the negotiation of a better purchase price through tax benefits to the selling shareholders.
• Creates a powerful equity-based employee benefit program designed to improve profitability and employee motivation.

ESOP Services

MS&K provides an extensive range of ESOP and ESOP-related services, with an emphasis on creativity, practicality and technical knowledge. We advise and represent clients regarding stock purchases and sales, corporate succession planning, estate planning, corporate financings, mergers and acquisitions, hostile takeover defenses and a variety of other matters, including:

• Consult with client as to objectives and feasibility of alternative arrangements.
• Design the structure of the ESOP and the ESOP transaction; coordinate ESOP issues with corporate, estate planning, financial and tax issues.
• Prepare ESOP documents and obtain determination letter from IRS.
• Prepare ESOP transaction documents and coordinate implementation of the transaction.
• Assist in obtaining financing and review bank loan documents.
• Coordinate project with client's other advisors, including stock appraiser, accountant and plan administrator.
• Representation in the event of IRS and/or Department of Labor audit.
• Consultation on day-to-day operational issues, such as coordination with other plans, stock appraisal, corporate governance, distribution and repurchase obligation and a variety of other administrative issues.