Unlike the tax departments at most firms, RoyseLaw takes an integrated tax and business approach that considers the goals both of companies and their shareholders. We will often counsel a company and its shareholders on pre-acquisition planning, employing such devices as trusts and planned giving.
RoyseLaw regularly sits on the opposing side of many of the largest firms in Silicon Valley in tax sensitive transactions and regularly acts as special counsel to other law firms on tax matters. We advise on tax aspects of mergers and acquisitions, litigation and settlement recoveries, executive and employee compensation matters, international transactions, licensing and intellectual property matters and partnership tax issues. Our tax representation ranges from closely held S corporations and limited liability companies (“LLCs”) to the in-house tax departments of multi-billion dollar international corporations.
M&A Support. Due to our substantial tax expertise, we are regularly asked to assist other law firms on specific tax issues arising in large complex transactions. While we often advise on general tax structuring, we also regularly consult on specific items including the availability of net operating losses to an acquirer, issues peculiar to S corporations and LLCs, the application of (and exemption from) golden parachute rules and associated excise taxes, and the ubiquitous Code Section 409A’s deferred compensation rules. RoyseLaw regularly advises on mergers and acquisitions in the following areas: tax-efficient structuring, such as forward and reverse subsidiary (triangular) mergers, tax-free reorganizations, Section 338(h)(10) elections and related matters; negotiating the tax provisions of the definitive agreements; tax and legal due diligence for acquirers; and post-acquisition matters.
Pre-Acquisition Planning. We believe the acquisition process begins long before term sheet stage. Our planning services include addressing legal and tax matters before they become due diligence issues and result in distractions or revaluations. Given our experience with corporate clients from “cradle to grave,” we can anticipate and address a potential target’s problems prior to engaging with an acquirer.
An Integrated Shareholder-Corporate Solution. Unlike the approach of many law firms, we view the ultimate owners as constituents whose interests are to be considered in an acquisition. Thus, we will, if requested, provide advice to ensure a tax-efficient result to the stakeholders. We often serve as independent counsel to large shareholders in a transaction to ensure their legal and tax concerns receive adequate consideration.
Partnerships and Limited Liability Companies (LLCs). The tax sections of a partnership or LLC agreement tend to be its most complex and economically significant provisions. A large part of our practice focuses on negotiation and drafting of LLC and partnership agreements, including the tax and distribution provisions. Our process also includes a proprietary “capital account analysis” that anticipates the effect of allocations and tests the economic substance of special allocations.
International Transactions. Business in Silicon Valley is international in scope, and even start-ups seek to expand their businesses offshore in a tax-efficient manner. A typical RoyseLaw middle market client looks to world markets for its products and services, and may be characterized by U.S. management, European distribution, Asian manufacturing and development in India. In addition, a significant part of our practice involves inbound planning for foreign-based multi-nationals, including the preparation of intercompany agreements, advice and analyses of transfer pricing policies, and permanent establishment and treaty issues.
Tax Practice and Controversy. Our tax practice includes advice on federal and state taxation of transactions, including return positions planning and analysis, as well as representation of clients in connection with administrative hearings. In addition, we are licensed to appear before the U.S. Tax Court and U.S. District Court, Northern District of California, for litigated tax disputes. We regularly represent taxpayers not only before the IRS audit and appeals divisions, but also before the California State Board of Equalization (sales tax matters), the Employment Development Division (employment tax matters) and the Franchise Tax Board (state income tax matters).
Equity Compensation. Silicon Valley was built on equity compensation. Our local practice includes drafting and implementing stock option, phantom (or virtual) stock and restricted stock plans. We offer analysis and planning for ISOs, parachute payments under Code Section 280G and deferred compensation payments under Code Section 409A. We are often called upon by litigation counsel to advise on the application of Code Section 409A to employment dispute settlements or severance agreements and by corporate counsel for advice on complying with Code Section 280G in M & A transactions.
Real Estate Tax. The real estate industry is one of the more tax-sensitive industries due to special tax incentives that Congress has granted real estate, as well as limitations to restrict perceived abuses prevalent in passive investment structures. Through our “of counsel” network, we often team with seasoned real estate counsel to advise on tax and legal aspects of real estate deals. We have substantial experience in 1031 exchanges, and were an early entrant into advising on syndicated and private tenancy in common (“TIC”) transactions. The real estate tax practice overlaps substantially with our corporate securities and partnership practice, as real estate deals are usually structured through LLCs and partnerships.
Business Succession Planning. No tax practice would be complete without an appreciation for wealth transfer issues. In conjunction with our business focus, we help business owners plan for the orderly and tax-efficient transfer of their assets to their heirs and beneficiaries. We are able to implement standard planning tools such as estate planning trusts, and more sophisticated techniques such as GRATS, sales to irrevocable grantor trusts and asset-protection planning.