Corporations and Partnerships in Virginia

Corporations and Partnerships in Virginia
Publication Date: 2016
Electronic Forms: 24
Available Formats: Print (1,197 pages, softcover, 2 volumes)
  Electronic (searchable PDF via flash drive, CD, or immediate download)
  Both Print and Electronic formats
Product #: 932

Information

Content Highlights:

  • Organization and Governance of Corporations
  • Basic Tax Aspects of Corporations
  • Federal and State Securities Regulation
  • Compensation and Fringe Benefits
  • Directors' and Officers' Liability
  • Dissension and Deadlock
  • Purchase and Sale of an Incorporated Business
  • Mergers and Other Reorganizations
  • Redemptions
  • Dissolution and Liquidation
  • Partnerships and Partnership Relations
  • Conversions and Mergers
  • Limited Liability Partnerships
  • Limited Partnerships
  • Tax Aspects of Partnerships
  • Transfers, Dissociation, and Dissolution

“This book is important because it equips attorneys to guide their clients through the formation and operation of corporations and partnerships in Virginia, within the framework of Virginia and federal statutes, case law, and regulations.”
- Heman A. Marshall, III, editor

Corporations and Partnerships in Virginia examines specific transactions and events in the life of a corporation or partnership, including the purchase and sale of a business, merger, dissension and deadlock, dissolution, and conversion. It also covers topics such as taxation, securities regulation, and director and officer liability. Forms for drafting corporate and partnership agreements are also provided, many in ready-to-use Word format.

This 2016 is current through the 2016 edition of the General Assembly and covers updates to federal law for the same period. The first new edition since 2009, it covers many new issues, including:

  • “Crowdfunding” regulations under new section 4(a)(6) of the federal Securities Act and Virginia’s intrastate crowdfunding exemption
  • The Net Investment Income Tax and its effect on S corporations
  • “The definition of a “fiduciary” under ERISA with regard to providing investment advice to an employee benefit plan
  • “The 2015 Bipartisan Budget Act and its effect on IRS audits partnerships

New Multi-Book Discount. Buy ANY 2 books and save 20%, 3 books and save 30%, 4 or more and save 40%. Use coupon code BUYMORE.
Government Attorney? Receive a 30% discount on publications, and a 50% discount on most seminars.
New Virginia Lawyer? (less than three years) Receive a 25% discount on publications and most seminars.


You may also be interested in:


Contract Law in Virginia

Choosing a Virginia Business Entity

Limited Liability Companies in Virginia

Virginia Business Torts

Virginia Civil Practice Forms

Virginia Law and Practice: A Handbook for Attorneys

 

Table of Contents

CHAPTER LIST

1. Organization And Governance Of Corporations

2. Basic Tax Aspects Of Corporations

3. Federal Securities Regulation

4. State Securities Regulation

5. Compensation Arrangements And Fringe Benefits

6. Directors' And Officers' Liability

7. Dissension And Deadlock

8. Purchase And Sale Of An Incorporated Business

9. Mergers And Other Reorganizations

10. Redemptions

11. Dissolution And Liquidation

12. Introduction To Partnerships

13. Nature Of Partnership And Partnership Relations

14. Transfers, Dissociation, And Dissolution And Winding Up Of Partnerships

15. Conversions And Mergers

16. Limited Liability Partnerships

17. Limited Partnerships

18. Dissolution And Merger Of Limited Partnerships

19. Tax Aspects Of Partnerships


Volume I

CHAPTER 1: ORGANIZATION AND GOVERNANCE OF
CORPORATIONS


1.1 THE VIRGINIA STOCK CORPORATION ACT

1.2 INCORPORATION
    1.201 State of Incorporation
    1.202 Articles of Incorporation
    1.203 Name
    1.204 Purpose Clause
    1.205 Power Clause
    1.206 Duration
    1.207 Signature Required

1.3 CAPITALIZATION; SHARES OF STOCK
    1.301 In General
    1.302 Authorized Shares
    1.303 Classes and Series of Stock
    1.304 Consideration for Shares
    1.305 Certificates for Shares
    1.306 Cumulative Voting
    1.307 Preemptive Rights
    1.308 Subscription for Shares

1.4 DIRECTORS, OFFICERS, AND AGENTS
    1.401 Directors
    1.402 Officers
    1.403 Indemnity for Officers and Directors
    1.404 Registered Agent and Office

1.5 FILING AND FEES
    1.501 Filing Articles
    1.502 Certificate of Incorporation
    1.503 Charter Fees and Annual Registration Fees

1.6 POST-INCORPORATION ORGANIZATION
    1.601 Organizational Meeting
    1.602 Bylaws
    1.603 Corporate Seal
    1.604 Minute Book
    1.605 Shareholder Meetings
    1.606 Board of Directors Meetings

1.7 DISPOSITION OF ASSETS
    1.701 Disposition of Assets in the Regular Course of
    Business
    1.702 Disposition of Assets Other Than in the Regular
    Course of Business
    1.703 Abandonment of the Transaction
    1.704 Restricted Businesses
    1.705 Appraisal Rights
    1.706 Tax Aspects

1.8 MERGERS AND SHARE EXCHANGES
    1.801 General Requirements for Mergers
    1.802 General Requirements for Share Exchanges
    1.803 Shareholder Approval
    1.804 Merger of Subsidiary
    1.805 Articles of Merger or Share Exchange
    1.806 Effect of Merger or Share Exchange
    1.807 Merger with a Foreign Corporation or Other Eligible
    Entity
    1.808 Appraisal Rights
    1.809 Tax Aspects

1.9 DOMESTICATIONS AND CONVERSIONS
    1.901 In General
    1.902 Requirements for Domestication
    1.903 Board and Shareholder Approval
    1.904 Foreign Corporations; Articles of Domestication
    1.905 Domestic Corporations; Surrender of Articles of
    Incorporation
    1.906 Effect of Domestication
    1.907 Abandonment of Domestication
    1.908 Requirements for Conversion
    1.909 Action on Plan of Entity Conversion
    1.910 Articles of Entity Conversion
    1.911 Effect of Entity Conversion
    1.912 Abandonment of Entity Conversion

1.10 APPRAISAL RIGHTS
    1.1001 In General
    1.1002 Assertion of Rights by Beneficial Owners and
    Nominees
    1.1003 Notice of Appraisal Rights
    1.1004 Procedure for Asserting Appraisal Rights
    1.1005 Procedures When Shareholders Are Dissatisfied with
    Payments or Offers

1.11 DISSOLUTION
    1.1101 In General
    1.1102 Dissolution by Directors and Shareholders
    1.1103 Resolving Known and Unknown Claims
    1.1104 Judicial Dissolution
    1.1105 Voluntary Termination of Corporate Existence
    1.1106 Automatic or Involuntary Termination of Corporate
    Existence
    1.1107 Reinstatement
    1.1108 Survival of Remedies After Termination of Corporate
    Existence

1.12 FOREIGN CORPORATIONS
    1.1201 Authority to Transact Business Required
    1.1202 Consequences of Transacting Business Without
    Authority
    1.1203 Certificate of Authority
    1.1204 Corporate Name of Foreign Corporations
    1.1205 Registered Office and Registered Agent of Foreign
    Corporations
    1.1206 Service of Process on Foreign Corporations
    1.1207 Withdrawal of Foreign Corporations
    1.1208 Automatic Revocation of Certificate of Authority
    1.1209 Revocation of Certificate of Authority by the SCC

APPENDIX 1-1: APPLICATION FOR RESERVATION OR FOR
RENEWAL OF RESERVATION OF A CORPORATE NAME
(FORM SCC 631)

APPENDIX 1-2: ARTICLES OF INCORPORATION WITH
INDEMNITY PROVISIONS

APPENDIX 1-3: ARTICLES OF INCORPORATION OF A VIRGINIA
STOCK CORPORATION (FORM SCC 619)

APPENDIX 1-4: “BLANK CHECK” PROVISION

APPENDIX 1-5: NO PREEMPTIVE RIGHTS

APPENDIX 1-6: SUBSCRIPTION LETTER

APPENDIX 1-7: STATEMENT OF RESIGNATION OF
REGISTERED AGENT (FORM SCC 636/835)

APPENDIX 1-8: UNANIMOUS WRITTEN CONSENT IN LIEU OF
ORGANIZATIONAL MEETING

APPENDIX 1-9: CORPORATION BYLAWS

APPENDIX 1-10: UNANIMOUS ACTION BY SHAREHOLDERS IN
LIEU OF SPECIAL MEETING

APPENDIX 1-11: CONSENT OF SHAREHOLDERS TO ACTION
WITHOUT MEETING

APPENDIX 1-12: APPLICATION FOR A CERTIFICATE OF
AUTHORITY TO TRANSACT BUSINESS IN VIRGINIA AS A
FOREIGN CORPORATION (FORM SCC 759/921)

APPENDIX 1-13: APPLICATION FOR AN AMENDED
CERTIFICATE OF AUTHORITY TO TRANSACT BUSINESS
IN VIRGINIA (FORM SCC 760/922)

APPENDIX 1-14: APPLICATION FOR A CERTIFICATE OF
WITHDRAWAL OF A FOREIGN CORPORATION
AUTHORIZED TO TRANSACT BUSINESS IN VIRGINIA
(FORM SCC 767/929)

APPENDIX 1-15: GUIDE FOR ARTICLES OF DOMESTICATION
(FORM SCC 722.4)

APPENDIX 1-16: GUIDE FOR ARTICLES OF INCORPORATION
SURRENDER (FORM SCC 722.5)

CHAPTER 2: BASIC TAX ASPECTS OF CORPORATIONS

2.1 INTRODUCTION

2.2 TAX CLASSIFICATION OF BUSINESS ORGANIZATIONS
UNDER CHECK-THE-BOX REGULATIONS
    2.201 Background
    2.202 Types of Business Entities Under Check-the-Box
    Regulations
    2.203 Election of Classification by Eligible Entities and
    Default Classification
    2.204 Limited Liability of Members Under Local Statute
    2.205 Virginia Income Taxation

2.3 TAX-FREE INCORPORATION OF CORPORATIONS
    2.301 General Rule
    2.302 Transfer Concept
    2.303 Property Concept
    2.304 Control Concept
    2.305 Stock or Securities
    2.306 Effect of Receipt of “Boot.”
    2.307 Determination of Basis
    2.308 Holding Periods

2.4 POSSIBLE TAX CONSEQUENCES OF TRANSFERS TO
CORPORATIONS
    2.401 In General
    2.402 Recapture Property
    2.403 Swap Funds
    2.404 Incorporation of a Going Concern

2.5 AVOIDING TAX-FREE INCORPORATION
    2.501 Advantages of Avoidance
    2.502 Achieving a Taxable Transfer

2.6 CAPITAL STRUCTURE OF THE CORPORATION
    2.601 General Considerations
    2.602 Major Tax Considerations
    2.603 Debt in the Capital Structure
    2.604 Limitations on Use of Debt

2.7 TAX ACCOUNTING MATTERS
    2.701 In General
    2.702 Corporate Income Items
    2.703 Corporate Deductions
    2.704 Alternative Minimum Tax
    2.705 Fiscal Year
    2.706 Methods of Accounting
    2.707 Tax Elections
    2.708 Tax Return and Payment of Tax
    2.709 Earnings and Profits

2.8 OPERATION OF THE CORPORATION
    2.801 General Concepts
    2.802 Documenting Actions in Minutes
    2.803 Dividends
    2.804 Shareholders as Employees
    2.805 Leasing Property to the Corporation
    2.806 Loans to Shareholders

2.9 SECTION 1244 STOCK
    2.901 Background
    2.902 General Requirements
    
2.10 SMALL BUSINESS INVESTMENT INCENTIVES
    2.1001 Targeted Capital Gains Exclusion
    2.1002 Rollover of Gain into Specialized Small Business
    Investment Companies

2.11 SUBCHAPTER S ELECTION
    2.1101 Background
    2.1102 Requirements for S Corporation Status
    2.1103 Making the Election
    2.1104 Effect of Election
    2.1105 Termination of the Election
    2.1106 Tax at the Corporate Level
    2.1107 Distributions to Shareholders
    2.1108 Basis Adjustments
    2.1109 The Corporation’s Taxable Year
    2.1110 The Net Investment Income Tax

2.12 UNREASONABLE ACCUMULATION OF EARNINGS
    2.1201 In General
    2.1202 Accumulated Taxable Income
    2.1203 Tax Avoidance Purpose
    2.1204 Reasonable Needs of the Business
    
2.13 PERSONAL HOLDING COMPANY
    2.1301 In General
    2.1302 Definition of “Personal Holding Company.”
    2.1303 Personal Holding Company Income
    2.1304 Undistributed Personal Holding Company Income
    2.1305 “Dividends Paid” Deduction

2.14 MULTIPLE CORPORATIONS
    2.1401 In General
    2.1402 Controlled Groups
    2.1403 ERISA Provisions

APPENDIX 2-1: ELECTION BY A SMALL BUSINESS
CORPORATION (FORM 2553)

APPENDIX 2-2: QUALIFIED SUBCHAPTER S SUBSIDIARY
ELECTION (FORM 8869)

APPENDIX 2-3: SHAREHOLDER’S CONSENT TO SUBCHAPTER
S ELECTION

APPENDIX 2-4: SAMPLE BENEFICIARY ELECTION FOR A QSST

APPENDIX 2-5: ELECTING SMALL BUSINESS TRUST
ELECTION FORM

CHAPTER 3: FEDERAL SECURITIES REGULATION

3.1 INTRODUCTION

3.2 SECURITIES ACT OF 1933
    3.201 In General
    3.202 Definition of Security
    3.203 Definition of Sale
    3.204 Securities Exempted by Statute

3.3 OFFERS AND SALES OF UNREGISTERED SECURITIES
    3.301 In General
    3.302 Intrastate Offerings
    3.303 Transactions Not Involving Any Public Offering
    3.304 Section 4(a)(5)
    3.305 Section 4(a)(6) and Crowdfunding
    3.306 Section 4(a)(7)
    3.307 Transactions Involving Limited Offerings:
    Regulation D
    3.308 Additional SEC Exemptions
    3.309 Integration

3.4 SECURITIES ACT REGISTRATION
    3.401 In General
    3.402 Forms
    3.403 Preparation of a Registration Statement
    3.404 Use of Proceeds
    3.405 Electronic Filings
    3.406 Informal Guidance Program for Small Businesses
    3.407 Emerging Growth Companies

3.5 RESALE OF SECURITIES
    3.501 In General
    3.502 Definition of Underwriter
    3.503 Rule 144

3.6 SECURITIES EXCHANGE ACT OF 1934
    3.601 In General
    3.602 Registration of Securities

3.7 PERIODIC REPORTING REQUIREMENTS
    3.701 In General
    3.702 Annual Report—Form 10-K
    3.703 Quarterly Reports—Form 10-Q
    3.704 Current Reports—Form 8-K
    3.705 Proxy Regulation
    3.706 Regulation of Insiders

3.8 ACQUISITION OF CONTROL AND TENDER OFFERS
    3.801 In General
    3.802 Acquisition of Control
    3.803 Tender Offer by Issuer for its Own Securities—Going
    Private
    3.804 Foreign Corrupt Practices Act

3.9 LIABILITY FOR VIOLATIONS OF SECURITIES LAWS
    3.901 Governmental Actions
    3.902 Private Actions Under the Securities Act
    3.903 Private Actions Under the Exchange Act

3.10 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

3.11 SECURITIES LITIGATION UNIFORM STANDARDS
ACT OF 1998

3.12 SARBANES-OXLEY ACT OF 2002

APPENDIX 3-1: REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 (FORM S-1)

APPENDIX 3-2: REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 (FORM S-3)

APPENDIX 3-3: REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 (FORM S-4)

CHAPTER 4: STATE SECURITIES REGULATION

4.1 INTRODUCTION
    4.101 In General
    4.102 Purpose of State Laws
    4.103 The Virginia Securities Act

4.2 REGISTRATION REQUIREMENTS
    4.201 In General
    4.202 Definitions

4.3 EXEMPTIONS FROM REGISTRATION
    4.301 In General
    4.302 Exempt Securities
    4.303 Exempt Transactions
    4.304 Solicitations of Interest
    4.305 Commission Exemptions
    4.306 Antifraud Provisions

4.4 THE REGISTRATION PROCESS
    4.401 In General
    4.402 Registration by Notification
    4.403 Registration by Coordination
    4.404 Registration by Qualification

4.5 REGISTRATION OF AGENTS
    4.501 In General
    4.502 Procedure for Registration
    4.503 Effective Date

4.6 LIABILITY FOR VIOLATIONS OF VIRGINIA ACT
    4.601 Criminal Penalties
    4.602 Investigations and Hearings
    4.603 Civil Liabilities
    4.604 Statute of Limitations
    4.605 Other Remedies

APPENDIX 4-1: NOTICE OF LIMITED OFFERING OF
SECURITIES (FORM VA-1)

APPENDIX 4-2: REGISTRATION BY NOTIFICATION
(FORM S.A. 4)

APPENDIX 4-3: REGISTRATION BY NOTIFICATION
(FORM S.A. 5)

CHAPTER 5: COMPENSATION ARRANGEMENTS AND FRINGE
BENEFITS


5.1 INTRODUCTION
    5.101 In General
    5.102 Employment Relationship
    5.103 Corporate Authority
    5.104 Employment Agreements
    5.105 Salary and Bonus Arrangements
    5.106 Effect of Tax Law Changes
    5.107 Sarbanes-Oxley Act of 2002

5.2 IMPACT OF ERISA
    5.201 In General
    5.202 Preemption of State Law
    5.203 Written Plan Document and Fiduciary Procedures
    5.204 Definition of Fiduciary
    5.205 Four Basic Fiduciary Responsibilities
    5.206 Allocation or Assignment of Fiduciary
    Responsibilities
    5.207 Investment Responsibilities of Fiduciaries
    5.208 Participant Directed Investment
    5.209 Personal Liability for Fiduciary Breach
    5.210 Fiduciary Liability Insurance and Bonding
    5.211 Prohibited Transactions
    5.212 Reporting and Disclosure Requirements
    5.213 Pension Benefit Guarantee Corporation
    5.214 Claims Procedures

5.3 WELFARE BENEFITS
    5.301 In General
    5.302 Accident and Health Benefits
    5.303 Applicable Large Employer
    5.304 Group Term Life Insurance Benefits
    5.305 Disability Insurance Benefits

5.4 CAFETERIA PLANS
    5.401 In General
    5.402 Medical Reimbursement Plans
    5.403 Dependent Care Plans

5.5 SPECIAL LIFE INSURANCE
    5.501 Split-Dollar Insurance
    5.502 Key Employee Insurance

5.6 QUALIFIED PENSION AND PROFIT SHARING PLANS
    5.601 In General
    5.602 Tax Consequences
    5.603 Classification of Plans
    5.604 Basic Requirements for Qualified Plans
    5.605 Special Provisions Permitted
    5.606 Limitations on Contributions and Benefits
    5.607 Profit Sharing Plan Formulas
    5.608 Pension Plan Formulas
    5.609 Top-Heavy Plans
    5.610 Required Forms of Payment
    
5.7 NONQUALIFIED PLANS
    5.701 Funded Plan
    5.702 Unfunded Plan
    5.703 Deferred Compensation Agreements
    5.704 Stock Options
    5.705 Incentive Stock Options
    5.706 Other Stock Arrangements
    5.707 Employment Tax Effects

5.8 SPECIAL PLANS
    5.801 Simplified Employee Pension Plans (SEPs)
    5.802 SIMPLE Plans

5.9 FRINGE BENEFITS
    5.901 In General
    5.902 Qualified Transportation and Parking Expenses
    5.903 No-Additional-Cost Service
    5.904 Qualified Employee Discount
    5.905 Working Condition Fringe Benefit
    5.906 De Minimis Fringe Benefit
    5.907 Employer-Provided Education Assistance
    
5.10 TAX CONSIDERATIONS IN DETERMINING
COMPENSATION
    5.1001 In General
    5.1002 Test for Reasonable Compensation

5.11 MILITARY SERVICE—USERRA AND HEART ACT
    5.1101 Health Care Coverage
    5.1102 Benefits Based on Length of Service
    5.1103 Retirement Benefits
    5.1104 The HEART Act of 2008

5.12 SAME-SEX SPOUSAL BENEFITS

CHAPTER 6: DIRECTORS’ AND OFFICERS’ LIABILITY

6.1 INTRODUCTION
    6.101 In General
    6.102 Duties of Directors and Officers
    6.103 Statutory Limitation on Damages

6.2 SOURCES OF CORPORATE DUTIES

6.3 THE DUTY OF CARE
    6.301 Case Law
    6.302 The Virginia Statute
    6.303 Limitation on Damages
    
6.4 THE DUTY OF LOYALTY
    6.401 In General
    6.402 Case Law
    6.403 The Virginia Statutes
    6.404 Interested Director and Officer Contracts
    6.405 Stock Transactions Enabling Incumbents to
    Strengthen or Retain Control
    6.406 Mergers Between Corporations with Common
    Directors
    6.407 Use of Corporate Funds by Directors in Proxy
    Contests
    6.408 The Corporate Opportunity Doctrine
    6.409 Limitation on Damages

6.5 LIABILITY FOR IMPROPER DISTRIBUTIONS
    6.501 In General
    6.502 Distribution to Shareholders
    6.503 Defenses and Contribution
    6.504 Relation to Other Laws

6.6 LIABILITIES UNDER THE FEDERAL SECURITIES LAWS

6.7 THE SECURITIES ACT OF 1933
    6.701 In General
    6.702 Liability in Registered Securities Distributions
    6.703 Liability for Failing to Register a Securities
    Distribution
    6.704 Liability for Inadequate Disclosure in an Unregistered
    Distribution
    6.705 Implied Remedies

6.8 THE SECURITIES EXCHANGE ACT OF 1934
    6.801 In General
    6.802 Exchange Act Registration and Periodic Reports
    6.803 Liability of Insiders and 10-Percent Shareholders
    6.804 Proxy Rule Violations
    6.805 Tender Offers
    6.806 Rule 10b-5 Liability
    6.807 Rule 10b-5: Trading and Tipping Using Inside
    Information
    6.808 Rule 10b-5 and Timely Dissemination of Corporate
    Information
    6.809 Rule 10b-5 and Corporate Mismanagement
    6.810 Directors’ and Officers’ Liability Under Rule 10b-5
    6.811 Other Securities Legislation
    
6.9 LIABILITY UNDER VIRGINIA SECURITIES LAW
    6.901 The Virginia Securities Act
    6.902 Civil Liabilities
    6.903 Criminal Responsibility
    6.904 Officers and Directors
    
6.10 SHAREHOLDER DERIVATIVE SUITS AND INDIVIDUAL
ACTIONS
    6.1001 Derivative Suits
    6.1002 Requirements for Action

6.11 INDEMNIFICATION AND LIABILITY INSURANCE
    6.1101 In General
    6.1102 Indemnification
    6.1103 Liability Insurance

APPENDIX 6-1: INDEMNIFICATION PROVISION

CHAPTER 7: DISSENSION AND DEADLOCK

7.1 INTRODUCTION
    7.101 Generally
    7.102 Ethical Concerns

7.2 THE CONCEPTS OF DISSENSION AND DEADLOCK

7.3 SOURCES OF DISSENSION AND DEADLOCK IN A CLOSE
CORPORATION

7.4 PREINCORPORATION PLANNING TO AVOID DISSENSION
OR DEADLOCK
    7.401 At the Outset
    7.402 Stock Ownership
    7.403 Additional Considerations
    7.404 Special Charter Provisions

7.5 SHAREHOLDERS’ AGREEMENTS: GENERAL
CONSIDERATIONS
    7.501 Statutory Authority
    7.502 General Provisions

7.6 SPECIFIC AGREEMENT OPTIONS TO ADDRESS
DISSENSION AND DEADLOCK
    7.601 Voting Trust or Voting Agreement
    7.602 Buy-Sell Option
    7.603 Majority Buyout
    7.604 Stock Redeemable at Holders’ Option
    7.605 Extraordinary Dissolution Procedures
    7.606 Arbitration
    
7.7 ABSENCE OF PREINCORPORATION PLANNING
    7.701 Sale of Stock to a Third Party
    7.702 Sale of Assets to a Third Party
    7.703 Split-Up
    7.704 Stock Redemption or Stock Purchase Agreements
    7.705 Voluntary Liquidation and Dissolution
    7.706 Appointment of a Mediator
    7.707 Appraisal Rights
    7.708 Judicial Liquidation or Appointment of Custodian
    7.709 Other Litigation

APPENDIX 7-1: SHAREHOLDERS’ AGREEMENT FOR A STOCK
CORPORATION

APPENDIX 7-2: SHAREHOLDERS’ AGREEMENT—RIGHT OF
FIRST REFUSAL

APPENDIX 7-3: SHAREHOLDERS’ AGREEMENT—PUT/CALL
PROVISION

APPENDIX 7-4: SHAREHOLDERS’ AGREEMENT—POWER OF
ATTORNEY

APPENDIX 7-5: VOTING TRUST AGREEMENT

APPENDIX 7-6: STOCKHOLDERS’ AGREEMENT

CHAPTER 8: PURCHASE AND SALE OF AN INCORPORATED
BUSINESS


8.1 INTRODUCTION

8.2 FACTORS INFLUENCING THE FORM OF TRANSACTION
    8.201 In General
    8.202 Tax-Related Factors
    8.203 Significance of Tax Provisions
    8.204 Effect of a Business Transfer

8.3 SALE OF ASSETS
    8.301 In General
    8.302 Nontax Factors
    8.303 Tax Effect on the Selling Corporation
    8.304 Allocation of the Sales Price
    8.305 Liquidation of the Selling Corporation
    8.306 Retention of Sales Proceeds
    8.307 Liquidation Before Sale
    
8.4 SUBCHAPTER S CORPORATION ISSUES INVOLVING
ASSET SALES
    8.401 The Seller
    8.402 The Buyer

8.5 SALE OF STOCK
    8.501 In General
    8.502 Nontax Factors
    8.503 Tax Treatment of the Corporation
    8.504 Tax Treatment of Shareholders
    8.505 Tax Treatment of the Buyer
    8.506 Sale of S Corporation Stock

8.6 LIQUIDATION OF ACQUIRED CORPORATIONS
    8.601 In General
    8.602 Liquidation of Subsidiary Corporations
    8.603 Insolvent Subsidiaries
    8.604 Tax Effect of Liquidation
    8.605 Basis of Assets

8.7 LEGAL OPINIONS

APPENDIX 8-1: CHECKLIST OF CONSIDERATIONS FOR THE
SALE OR PURCHASE OF AN INCORPORATED BUSINESS

APPENDIX 8-2: CHECKLIST FOR PREPARING A CONTRACT FOR
THE SALE OR PURCHASE OF AN INCORPORATED
BUSINESS

APPENDIX 8-3: PLAN OF LIQUIDATION AND DISSOLUTION

APPENDIX 8-4: ASSET ACQUISITION STATEMENT (FORM 8594)

APPENDIX 8-5: CORPORATE DISSOLUTION OR LIQUIDATION
(FORM 966)

CHAPTER 9: MERGERS AND OTHER REORGANIZATIONS

9.1 GENERAL CONSIDERATIONS
    9.101 Principal Advantages and Disadvantages
    9.102 Statutory Scheme
    9.103 Types of Reorganizations

9.2 REQUIREMENTS FOR ALL REORGANIZATIONS
    9.201 In General
    9.202 Plan of Reorganization
    9.203 Business Purpose
    9.204 Continuity of Proprietary Interest
    9.205 Continuity of Business Enterprise
    9.206 Investment Companies
    9.207 Step Transaction Doctrine

9.3 (A) REORGANIZATION: MERGERS AND
CONSOLIDATIONS
    9.301 In General
    9.302 Virginia Statutory Requirements
    9.303 Internal Revenue Code Requirements

9.4 (B) REORGANIZATION: STOCK-FOR-STOCK EXCHANGES
    9.401 In General
    9.402 Virginia Statutory Requirements
    9.403 Internal Revenue Code Requirements
    9.404 Creeping Control Problem
    9.405 Liquidation of the Target Corporation

9.5 (C) REORGANIZATION: STOCK-FOR-ASSET EXCHANGES
    9.501 In General
    9.502 Virginia Statutory Requirements
    9.503 Internal Revenue Code Requirements

9.6 (D) REORGANIZATION: TRANSFER OF ASSETS TO A
CONTROLLED CORPORATION
    9.601 In General
    9.602 Acquisitive (D) Reorganization
    9.603 Divisive (D) Reorganization
    
9.7 (E) REORGANIZATION: RECAPITALIZATION
    9.701 Exchange
    9.702 Stock or Securities
    9.703 No “Solely” Requirement
    9.704 No Continuity of Interest Required
    9.705 Examples

9.8 (F) REORGANIZATION: MERE CHANGE IN IDENTITY OR
FORM

9.9 (G) REORGANIZATION: BANKRUPTCY REORGANIZATION

9.10 PRINCIPAL INCOME TAX CONSEQUENCES OF
REORGANIZATIONS
    9.1001 Tax Consequences to the Acquiring Corporation
    9.1002 Tax Consequences to the Target Corporation
    9.1003 Tax Consequences to the Target Corporation’s
    Shareholders
    9.1004 Tax Consequences to Nonstatutory Option Holders
    and Debtholders of the Target Corporation
    9.1005 Taxable Year of the Target Corporation
    9.1006 Tax Classification Elections of Disregarded
    Subsidiaries

9.11 I.R.C. § 351 AS AN ACQUISITION TECHNIQUE

9.12 SPECIAL PROBLEMS IN REORGANIZATIONS
    9.1201 Unwanted Assets
    9.1202 Dissenting Shareholders
    9.1203 Contingent or Escrowed Stock
    9.1204 Drop-Down or Push-Up of Stock or Assets
    9.1205 I.R.C. § 306 Stock
    9.1206 Assumption of Liabilities
    9.1207 Fractional Shares

9.13 CHOICE OF ACQUISITIVE REORGANIZATION
    9.1301 In General
    9.1302 (A) Reorganization
    9.1303 (B) Reorganization
    9.1304 (C) Reorganization

9.14 RULING REQUESTS

9.15 MISCELLANEOUS EMPLOYEE TAX MATTERS
    9.1501 Income Tax Withholding
    9.1502 Social Security Taxes
    9.1503 Federal Quarterly Reports, Form 941
    9.1504 Unemployment Taxes
    9.1505 Annual Wage Information Returns

9.16 FINANCIAL ACCOUNTING ASPECTS

9.17 CERTAIN SECURITIES LAW ASPECTS
    9.1701 In General
    9.1702 Registration
    9.1703 Exemptions

APPENDIX 9-1: SAMPLE FORMAT FOR A LETTER RULING
REQUEST

APPENDIX 9-2: SAMPLE CHECKLIST FOR A LETTER RULING
REQUEST

CHAPTER 10: REDEMPTIONS

10.1 INTRODUCTION
    10.101 Uses for Redemptions
    10.102 Funding for Purchase
    10.103 Collateral for Deferred Payments
    10.104 Management Participation

10.2 STATE LAW REQUIREMENTS FOR REDEMPTIONS

10.3 TAX TREATMENT FOR REDEEMED SHAREHOLDERS
    10.301 In General
    10.302 Internal Revenue Code (I.R.C.) § 302 Redemptions
    10.303 Redemption upon Death
    10.304 Redemptions by Related Corporations
    10.305 Timing of the Redemption
    10.306 Installment Sales
    10.307 Treatment of Loss
    10.308 Constructive Dividend
    10.309 Restrictions on the Buyer
    10.310 Reporting Requirement
    
10.4 TAX TREATMENT OF THE CORPORATION UPON
REDEMPTION
    10.401 General Rule
    10.402 Appreciated Property
    10.403 Installment Obligations
    10.404 Effect on Earnings and Profits upon a Distribution in
    Redemption of Stock
    10.405 Tax Planning for “Loss” Assets

CHAPTER 11: DISSOLUTION AND LIQUIDATION

11.1 INTRODUCTION

11.2 COMPLETE LIQUIDATIONS
    11.201 In General
    11.202 Requirements of Complete Liquidation
    11.203 Tax Treatment of the Corporation
    11.204 Tax Treatment of a Shareholder
    
11.3 COMPLETE LIQUIDATION OF A SUBSIDIARY
    11.301 In General
    11.302 Basis of Property Received
    11.303 Election to Step Up Basis

11.4 DISSOLUTION OF A CORPORATION UNDER VIRGINIA
LAW
    11.401 Voluntary Dissolution
    11.402 Disposition of Claims
    11.403 Early Termination of Corporate Existence
    11.404 Automatic Termination of Corporate Existence
    11.405 Reinstatement
    11.406 Involuntary Termination of Corporate Existence
    11.407 Judicial Dissolution
    11.408 Election to Purchase
    11.409 Survival of Remedies

APPENDIX 11-1: SAMPLE CORPORATE RESOLUTION AND
PLAN OF LIQUIDATION

INDEX

Volume II


CHAPTER 12: INTRODUCTION TO PARTNERSHIPS

12.1 HISTORY OF THE UNIFORM PARTNERSHIP ACT

12.2 SUMMARY OF MAJOR CHANGES
    12.201 Generally
    12.202 Entity Theory of Partnership
    12.203 Admission of Partner Without Contribution or
    Acquisition of Transferable Interest
    12.204 No Dissolution upon Change in Partnership Relations
    12.205 Explicit References to Fiduciary Duties
    12.206 Default Rules That May Be Overridden by Agreement

12.3 MECHANICS
    12.301 Central Filing and Statements
    12.302 Effective Date

APPENDIX 12-1: STATE CORPORATION COMMISSION
PARTNERSHIP STATEMENTS AND FEES

CHAPTER 13: NATURE OF PARTNERSHIP AND PARTNERSHIP
RELATIONS

13.1 NATURE OF A PARTNERSHIP
    13.101 The Partnership as an Entity
    13.102 Formation of a Partnership
    13.103 Partnership Property

13.2 RELATIONS OF PARTNERS TO THIRD PARTIES
    13.201 Agency of a Partner
    13.202 Nature of a Partner’s Liability
    13.203 Transfer of Partnership Property
    13.204 Statement of Partnership Authority
    13.205 Statement of Denial
    13.206 Actions by and Against a Partnership and Partners

13.3 RELATIONSHIP OF PARTNERS TO EACH OTHER AND TO
THE PARTNERSHIP
    13.301 Introduction
    13.302 Partners’ Management Rights and Economic
    Interests
    13.303 Rights and Duties with Respect to Information
    13.304 Standards of a Partner’s Conduct
    13.305 Suits by the Partnership and Partners

APPENDIX 13-1: STATEMENT OF PARTNERSHIP AUTHORITY
(FORM UPA-93)

APPENDIX 13-2: STATEMENT OF DENIAL FOR A PARTNERSHIP
(FORM UPA-94)

APPENDIX 13-3: PARTNERSHIP AGREEMENT—REGISTERED
LIMITED LIABILITY PARTNERSHIP

CHAPTER 14: TRANSFERS, DISSOCIATION, AND
DISSOLUTION AND WINDING UP OF PARTNERSHIPS


14.1 INTRODUCTION

14.2 TRANSFERS
    14.201 Partner’s Interest in Partnership Property
    14.202 Partner’s Transferable Interest in the Partnership
    14.203 Transfer of a Transferable Interest
    14.204 Transferable Interest Subject to a Charging Order

14.3 DISSOCIATION
    14.301 Mechanics of Dissociation
    14.302 Purchase of a Dissociated Partner’s Interest
    14.303 Conclusion

14.4 DISSOLUTION AND WINDING UP
    14.401 Generally
    14.402 Events Giving Rise to Dissolution
    14.403 Authority and Liability in Connection with
    Dissolution
    14.404 Settlement of Accounts
    14.405 Conclusion

APPENDIX 14-1: STATEMENT OF DISSOCIATION FROM A
PARTNERSHIP (FORM UPA 115)

APPENDIX 14-2: STATEMENT OF DISSOLUTION OF A
PARTNERSHIP (FORM UPA-121)

CHAPTER 15: CONVERSIONS AND MERGERS

15.1 INTRODUCTION

15.2 CONVERSIONS
    15.201 Generally
    15.202 Conversion to a Limited Partnership
    15.203 Conversion from a Limited Partnership
    15.204 Effect of Conversion
    
15.3 MERGERS
    15.301 Generally
    15.302 Plan of Merger
    15.303 Effective Time of Merger
    15.304 Effect of Merger
    15.305 Postmerger Liability
    15.306 Statement of Merger

15.4 PROPERTY TITLE RECORDS
    15.401 Generally
    15.402 Limited Partnerships
    15.403 Partnerships

APPENDIX 15-1: STATEMENT OF MERGER

CHAPTER 16: LIMITED LIABILITY PARTNERSHIPS

16.1 INTRODUCTION

16.2 STRUCTURE OF THE LLP PROVISIONS

16.3 FEATURES OF THE LLP PROVISIONS
    16.301 Generally
    16.302 Name Requirements
    16.303 Filing Requirements
    16.304 Annual Report and Annual Fee Requirements
    16.305 Foreign Qualification and Recognition
    16.306 Amendment and Cancellation of Registration
    16.307 Forms

16.4 PROFESSIONAL SERVICE LLPS

APPENDIX 16-1: STATEMENT OF REGISTRATION AS A
VIRGINIA REGISTERED LIMITED LIABILITY
PARTNERSHIP (FORM UPA-132)

APPENDIX 16-2: PARTNERSHIP AGREEMENT—LIMITED
LIABILITY PARTNERSHIP

APPENDIX 16-3: STATEMENT OF REGISTRATION AS A
FOREIGN REGISTERED LIMITED LIABILITY
PARTNERSHIP (FORM UPA-138)

APPENDIX 16-4: STATEMENT OF AMENDMENT OF A
STATEMENT OF REGISTRATION OF A VIRGINIA OR
FOREIGN REGISTERED LIMITED LIABILITY
PARTNERSHIP (FORM UPA-136)

APPENDIX 16-5: STATEMENT OF CANCELLATION OF A
STATEMENT OF REGISTRATION OF A VIRGINIA
REGISTERED LIMITED LIABILITY PARTNERSHIP (FORM
UPA-137)

APPENDIX 16-6: STATEMENT OF CANCELLATION OF
REGISTRATION AS A FOREIGN REGISTERED LIMITED
LIABILITY PARTNERSHIP (FORM UPA-139)

CHAPTER 17: LIMITED PARTNERSHIPS

17.1 INTRODUCTION

17.2 FORMATION OF LIMITED PARTNERSHIPS
    17.201 In General
    17.202 Partnership Name
    17.203 Principal Office
    17.204 Registered Agent
    17.205 Limited Partnership as Registered Limited Liability
    Partnership

17.3 CERTIFICATE OF LIMITED PARTNERSHIP
    17.301 In General
    17.302 Requirements for Certificate of Limited Partnership
    17.303 Execution of Certificate
    17.304 Filing
    17.305 Effective Date for Certificate
    17.306 Copy to Each Limited Partner
    17.307 Effect of Certificate
    17.308 Amendment or Cancellation
    17.309 False Statements in Certificate
    17.310 Automatic Cancellation of Certificate

17.4 CONTRIBUTIONS OF LIMITED PARTNERS
    17.401 Form of Contribution
    17.402 Liability for Contribution

17.5 RIGHTS OF LIMITED PARTNERS
    17.501 Sharing of Profits, Losses, and Distributions
    17.502 Voting Rights
    17.503 Right to Obtain Partnership Information

17.6 LIABILITY OF LIMITED PARTNERS TO THIRD PARTIES
    17.601 “Participation in Control of Business” Test
    17.602 Activities Not Constituting “Participation in Control.”
    17.603 Rights of Creditors of a Limited Partner
    17.604 Status of a Person Erroneously Believing Himself or
    Herself a Limited Partner

17.7 ADDITIONAL LIMITED PARTNERS
    17.701 Interests Generally Assignable in Whole or in Part
    17.702 Right of Assignee to Become a Limited Partner
    17.703 Right of Judgment Creditor

17.8 GENERAL PARTNERS IN LIMITED PARTNERSHIP

17.9 UNLAWFUL TRANSACTION OF BUSINESS AS LIMITED
PARTNERSHIP

APPENDIX 17-1: APPLICATION FOR RESERVATION OR FOR
RENEWAL OF RESERVATION OF A LIMITED
PARTNERSHIP NAME (FORM LPA-73.3)

APPENDIX 17-2: CERTIFICATE OF LIMITED PARTNERSHIP
(FORM LPA-73.11)

APPENDIX 17-3: CERTIFICATE OF AMENDMENT OF A
CERTIFICATE OF LIMITED PARTNERSHIP (FORM LPA-
73.12)

APPENDIX 17-4: CERTIFICATE OF CANCELLATION OF A
VIRGINIA LIMITED PARTNERSHIP (FORM LPA-73.52:4)

APPENDIX 17-5: STATEMENT OF REGISTRATION AS A
VIRGINIA REGISTERED LIMITED LIABILITY
PARTNERSHIP (FORM UPA132)

APPENDIX 17-6: PARTNERSHIP AGREEMENT—REGISTERED
LIMITED LIABILITY LIMITED PARTNERSHIP

CHAPTER 18: DISSOLUTION AND MERGER OF LIMITED
PARTNERSHIPS


18.1 DISSOLUTION OF LIMITED PARTNERSHIPS
    18.101 Significance and Effect of Dissolution
    18.102 Events Resulting in Dissolution
    18.103 Dissolution by Withdrawal of General Partner

18.2 WINDING UP THE LIMITED PARTNERSHIP

18.3 DISTRIBUTION OF LIMITED PARTNERSHIP ASSETS

18.4 MERGERS OF LIMITED PARTNERSHIPS
    18.401 Generally
    18.402 Plan of Merger
    18.403 Approval of Merger
    18.404 Articles of Merger
    18.405 Effect of Merger

CHAPTER 19: TAX ASPECTS OF PARTNERSHIPS

19.1 INTRODUCTION
    19.101 Generally
    19.102 Election Not to Be a Partnership

19.2 CLASSIFICATION FOR FEDERAL TAX PURPOSES
    19.201 Generally
    19.202 Business Entities
    19.203 Business Entities Automatically Classified as
    Corporations
    19.204 Classification of Business Entities That Are Not “Per
    Se” Corporations
    19.205 Transition Rule

19.3 PARTNERSHIP FORMATION
    19.301 General Rule
    19.302 Special Situations
    19.303 Basis, Holding Period, and Character of Partnership
    Assets
    19.304 Allocation of Items with Respect to Contributed
    Property
    19.305 Basis in Partnership Interest
    19.306 Continuing Adjustments to Basis

19.4 TAX ACCOUNTING MATTERS
    19.401 Generally
    19.402 Separately Stated Items
    19.403 Choice of Taxable Year
    19.404 Change of Partnership Year
    19.405 Reporting Income by Partners
    19.406 Tax Elections
    19.407 Basis Adjustments
    
19.5 PARTNERSHIP OPERATION
    19.501 Partners’ Distributive Shares
    19.502 Special Allocations
    19.503 Current Distributions
    19.504 Guaranteed Payments
    19.505 Self-Employment Income Tax
    19.506 Transactions Between Partner and Partnership
    19.507 Close of the Partnership’s Taxable Year
    19.508 Amortization of Start-Up Expenses and Intangibles
    
19.6 TRANSFER OF A PARTNER’S INTEREST

19.7 LIQUIDATION OF A PARTNER’S INTEREST
    19.701 Generally
    19.702 Gain or Loss
    19.703 Basis of Distributed Property
    19.704 Payments to a Retiring or Deceased Partner’s
    Successor
    19.705 Disposition of Distributed Property

19.8 UNREALIZED RECEIVABLES AND APPRECIATED
INVENTORY
    19.801 Generally
    19.802 Unrealized Receivables
    19.803 Appreciated Inventory
    19.804 Application of I.R.C. § 751 to Distributions

19.9 LIMITED PARTNERSHIPS

19.10 AT-RISK AND PASSIVE LOSS RULES
    19.1001 At-Risk Rules
    19.1002 Passive Loss Rules

19.11 FAMILY PARTNERSHIPS
    19.1101 Generally
    19.1102 Distributive Shares

19.12 PARTNERSHIP AUDITS FOR TAX YEARS BEGINNING
BEFORE JANUARY 1, 2018
    19.1201 Generally
    19.1202 Unified Proceedings
    19.1203 Notice to Partners
    19.1204 Tax Matters Partner
    19.1205 Administrative Proceedings
    19.1206 Assessment Procedure
    19.1207 Other Matters

19.13 PARTNERSHIP AUDITS FOR TAX YEARS BEGINNING
AFTER DECEMBER 31, 2017
    19.1301 Generally
    19.1302 Assessment and Collection Procedures
    19.1303 Partnership Representative
    19.1304 Administrative and Court Proceedings
    19.1305 Practical Considerations
    
APPENDIX 19-1: ENTITY CLASSIFICATION ELECTION
(FORM 8832)

TABLE OF AUTHORITIES

INDEX


Authors

Editor

Heman A. Marshall, III

Authors

Neil V. Birkhoff

Jocelyn West Brittin

G. Franklin Flippin

Elizabeth G. Hester

James A. Kennedy

Christopher M. Kozlowski

Greg C. Matisoff

P. Ryan Messier

Eric J. Nedell

Martin B. Richards

Bradley A. Ridlehoover

David W. Robertson

David A. Snouffer

Bruce C. Stockburger

Evelyn Small Traub

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