Message from the Firm

By Brad Cohen

Anytime an entity incorporates a division as a subsidiary, the division-which was formerly a disregarded entity for tax purposes-becomes a separate entity for tax purposes. David Schwartz's article advises entities to take special care if there are existing loans between the division and the entity. Otherwise, it is possible that, through incorporation, the parent company could be treated as receiving the promissory note in the exchange, resulting in the incorporation being considered a taxable event.

The Internal Revenue Service has provided proposed regulations with respect to the compensatory transfer of partnership interests. Robin Gilden and James Chapman discuss the proposed regulations in their article.

Joe Faucher and Max Sank review a recent case from the Ninth Circuit that reminds employers of the need to maintain a strong anti-harassment policy. Such a policy can serve the dual purpose of preventing sexual harassment in the workplace and providing the employer with a defense which can limit the employer's liability should a sexual harassment lawsuit arise.

Rich Luftman's article provides a summary of the changes in the law as a result of the Non-Profit Integrity Act of 2004.

Along with this newsletter we are sending you an article, "Labor Law Update: What's New for 2006 and How to Make Sure You're in Compliance" written by the head of our Employment Law Practice Group, Mark Terman.

As always, if you have a question about an article in this newsletter, please contact the author or me.

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