■ Family Business
Continued From Page 9
condensed timeline enforced by the pending
litigation by leveraging the artificial intelligence
capabilities of Marcum’s technology consulting
group to process large amounts of data quickly
and efficiently. We were able to perform the due
diligence, value the business, help structure a
successful settlement, and achieve a great result
for both the older and younger generations.
Marks Paneth LLP
By John Evans, CPA,
Partner-in-Charge,
New Jersey Office
The 2017 Tax Cuts and Jobs Act
introduced several new interna-
tional provisions into the IRC
designed to force immediate repatriation of
earnings held in Controlled Foreign Corpora-
tions (CFCs) in 2017 and reduce the deferral of
tax on CFC earnings going forward. As a result,
individuals at a family office client were faced
with incurring an unexpected tax liability of
approximately $1.75 million because of the
way individuals were taxed pursuant to this
new provision. Although the tax was payable
in eight annual installments, it was an issue
since the CFC had no intention of distributing
current or future earnings in the near future.
To minimize this liability, we informed these
family members of a longstanding provision in
IRC Sec. 962 that would allow them to elect to
be taxed as a corporation and reduce repatria-
tion tax liability to approximately $200,000. Al-
though there were still some issues that could
eliminate some of the tax advantages of this
election, we believed they would be favorably
resolved and still apply to maximize the tax de-
ferral. To date it appears we were right. In fact,
the taxpayers continue to utilize IRC Sec. 962
to elect to be taxed as a corporation and miti-
gate other international provisions of the Act,
specifically GILTI.
Mazars USA LLP
By Jason Pourakis, CPA,
Partner,
Leader, Entrepreneurial
Business Services Group
We recently had the older and
younger generations of a family
business at odds over the future strategy of the
business. The younger generation wanted to
be more aggressive in the marketplace and the
older generation was happy where the business
was. Mazars, acting as moderator, brought both
generations into a structured meeting around
the ownership mindset, customers, and quality
of management. Each family member discussed
their thoughts, with our focus on “where are
you today” and “where you would like to be in
the future.” We were able to quickly identify the
10 COMMERCE www. commercemagnj.com
biggest gaps in the vision of the future, poten-
tial customer base wants/needs, and how to best
train management to facilitate change. Mazars
was able to improve the company’s strategy,
provide solutions on how to “close the gaps”
and concrete steps to execute upon these solu-
tions. The company took a number of actions
based upon our assessment and two years after
these decisions, the company has grown 10 per-
cent to the top line, 14 percent to the bottom
line, and is paying out a shareholder with oper-
ating cash flow.
MSPC
By Jon S. Gagliardi, CPA,
Managing Partner
For the last 35 years, MSPC
has served a family-owned inter-
national wholesale distributor
of architectural hardware. The
company, established in 1964, was led by its
founder until 2017. Upon his untimely death,
two of his children, who already had various
roles and responsibilities within the company,
found themselves at the helm. Although both
were already preparing for leadership roles, they
weren’t ready for the sudden change. Fortu-
nately, we had routinely advised the father on
tax planning and were able to fill in some of the
gaps. There was initially some confusion regard-
ing various tax strategies that were put in place
before they stepped into leadership roles. Our
long-standing relationship and advisory role
allowed us to provide them with clear direction
and support on many different levels at a time
of uncertainty. Today the company is thriving
under their leadership, and we are working with
them to ensure success for the next generation.
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