K.C. Chiang and Edward Taibi Publish Article in Tax Notes on the Mixing Bowl Structure in Monetizing Closely Held Businesses

Olshan tax partner K.C. Chiang and corporate partner Edward Taibi published an article in Tax Notes (subscription required) entitled “The Mixing Bowl Structure in Monetizing Closely Held Businesses.” In the article, K.C. and Ed discuss how business owners could avoid tax consequences and achieve deferrals when a new partner acquires a controlling stake in the business. Among the options are “mixing bowl transactions,” in which parties exchange businesses or assets by contributing them to a newly created partnership, and the partnership later distributes the businesses or assets. “Given the complexity of these mixing bowl transactions and the resulting tax benefits for existing owners who want to monetize their business ownership without triggering significant taxes, prospective investors could negotiate a more favorable valuation and resulting ownership percentage from the buyer perspective in exchange for considering this transaction structure,” K.C. and Ed explain. “The downside includes the need for continuous monitoring of these structures to ensure they are not compromised so that disputes or disagreements among the parties are forestalled.”