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The Louisiana Supreme Court has refused to review the decision of the First Circuit Court of Appeal in ConAgra Foods, Inc. vs. Bridges, 2010-0907 (La. App. 1st Cir. 10/29/10), 48 So.3d 1249. In ConAgra Foods, the First Circuit determined that ConAgra Foods, Inc. would receive the benefits of Louisiana net operating loss carryovers held by subsidiaries, which had been sold in Internal Revenue Code (“IRC”) §338(h)(10) transactions . Under federal tax law, the parties to a stock sale can elect IRC §338(h)(10) treatment such that the stock sale is treated as an asset sale for income tax purposes and the tax attributes of the subsidiaries that are sold are acquired by the selling parent corporation. The steps that occur under an IRC §338(h)(10) transaction are as follows:
Continue Reading Louisiana Supreme Court Refuses to Review Net Operating Loss Decision

As companies expand their operation into foreign states, it is essential to determine the potential tax liability for conducting business in those jurisdictions.  Although states differ as to their treatment of out-of-state taxpayers, all states are bound by the U.S. Constitution and federal law and jurisprudence, which require a nexus between a taxpayer and a…

The application of corporate veil piercing theories to limited liability companies is still in its early stages in Louisiana jurisprudence. In Hollowell v. Orleans Regional Hosp. LLC, the U.S. Court of Appeals for the Fifth Circuit became the first court applying Louisiana law to pierce the veil of a Louisiana limited liability company on an “alter ego basis,” adopting from corporate veil piercing jurisprudence a non-exhaustive list of factors, namely: 1) commingling of corporate and shareholder funds; 2) failure to follow statutory formalities for incorporating and transacting corporate affairs; 3) undercapitalization; 4) failure to provide separate bank accounts and bookkeeping records; and 5) failure to hold regular shareholder and director meetings. 217 F.3d 379, 385-386 (5th Cir. 7/18/00); citing Riggins v. Dixie Shoring Co., 590 So.2d 1164, 1168 (La. 1991). The court emphasized that the inquiry is in fact a “totality of the circumstances” test, and “courts are not limited to these five factors when invoking the alter ego doctrine.” Id., at 387, citing Riggins, at 1168.
Continue Reading Piercing the Veil of an LLC – The Fourth Circuit Weighs In

It is a fairly common practice for individuals purchasing pleasure yachts to take calculated steps to minimize sales taxes on their purchases. In fact, a simple “Google” search on the subject reveals many websites offering free advice on this issue. One of the tactics suggested by several websites seems fairly simple: instead of the individual purchasing the yacht, the individual forms a corporation, and the corporation purchases the yacht.
Continue Reading Structuring the Purchase of a Vessel Through a Corporate Entity for Tax Purposes Can Have Unintended Consequences

The United States Supreme Court recently resolved conflicts among the Circuit Courts about the citizenship of a corporation for determining diversity of citizenship jurisdiction (1). This will allow corporations to analyze with more predictable results whether to remove a case to federal court. In Hertz Corp. v. Friend, et al, No. 08-1107 (February 23, 2010) (a unanimous decision, which is unusual in and of itself), the Court decided that when determining a corporation’s citizenship for diversity of citizenship jurisdiction, the “principal place of business” of the corporation is “the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities”—something that courts have referred to as the “nerve center” of the corporation.
Continue Reading Supreme Court Clarifies Definition of a Corporation’s “Principal Place of Business”

Cordell and Brian Haymon are attorneys, which means the fine points of selling a business do not intimidate them. Yet when the time came to sell Petroleum Services Corporation, a firm their father started in 1952, they didn’t try to do all the work themselves. Instead, they hired Kean Miller’s Blane Clark. As Mr. Clark…

On March 21, 2010, the U.S. House of Representatives on almost a straight party-line vote passed two final healthcare reform bills late Sunday night. Initially, the House of Representatives passed H.R. 3950, the Patient Protection and Affordable Care Act, by a vote of 219 to 212.

Following the passage of H.R. 3950, the House of…

As discussed in the recent New York Times article, federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.

President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years.  More than…

On January 27, 2010, the SEC voted 3-2 to issue an interpretive guidance “on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change.” Chair Mary Shapiro emphasized that the interpretive release is not intended to create new legal requirements, but is to clarify the requirements already applicable for reporting material risks on public disclosure statements. She was careful to avoid arguments on the science, stating: “We are not opining on whether the world’s climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics.”
Continue Reading Securities and Exchange Commission Issues Interpretive Guidance for Reporting Risks Due to Climate Change

On January 22, 2010, President Obama signed a law which allows taxpayers to claim a charitable deduction in the 2009 tax year for cash donations made through March 1, 2010 for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. The IRS notice on this new law indicates that…