View Recent Blog Posts in this Area of Practice

• Louisiana's Business Judgment Rule Protects Corporate Officers From Being Second Guessed, Unlike California's Corporate Law By J. Eric Lockridge and Glenn M. Farnet Louisiana protects corporate directors and officers from liability to shareholders or others when they make decisions in good faith and reasonably believe that their decisions are in the best interest of the organization. This principal, called the “business judgment rule,” gives officers and directors the freedom to take risks and to make decisions without wondering if shareholders or others will attempt to sue them, personally, if a particular decision ultimately results in a loss to the company. The business judgment rule itself is not news; it has been discussed in American case law since at least the 1940s, and is now codified in the statutory law of some states, including Louisiana. The blog-worthy news about the business judgment rule is a December 13, 2011 court decision from a federal court in California in FDIC v. Perry noting that the statutory version of the rule enacted by California’s legislature protects only ....
• GO Zone Bonds Approved for Current Refundings By Angela W. Adolph The Gulf Opportunity Zone Act of 2005 (the “Act”) added several new sections to the Internal Revenue Code that provide certain tax benefits for affected hurricane disaster areas. Section 1400N(a) authorized the issuance of Qualified Private Activity Bonds (“Qualified Bonds”) to finance the construction and rehabilitation of residential and nonresidential property located in the Gulf Opportunity Zone (“GO Zone”). The Act gave private business owners and corporations the opportunity to borrow capital at favorable tax-exempt rates to acquire, construct, reconstruct or renovate qualified property in the GO Zone. The deadline for the issuance of GO Zone Bonds was extended through the end of 2011. However, the Act did not address the current refunding of Qualified Bonds after the applicable issuance deadline had passed.   In a refunding, an issuer sells bonds and uses the proceeds to redeem outstanding debt that typically has ....
• Louisiana Expands Small Succession Procedure To Include Ancillary Probate Proceedings By Kevin C. Curry Act Number 323 of the 2011 Regular Session of the Louisiana Legislature modified the rules on small successions in Louisiana. In addition to some other changes, the law allows the use of the small succession procedure, which generally involves filing an affidavit rather than opening judicial proceedings, to transfer title to immovable property in Louisiana if the property has a value of $75,000.00 or less as of the date of death. Further, this new rule applies to successions of individuals who died either before or after the effective date of the legislation. Under this new rule, if a decedent was domiciled outside of Louisiana at the time of death and had a testament that has been probated by a court order of another state, then title to the immovable property in Louisiana, including mineral interests, can be transferred through the small succession procedure if the property has a gross value of $75,000.00 as of the date of death. The new legislation may need some ....
• Louisiana Supreme Court Refuses to Review Net Operating Loss Decision By Chris Dicharry and Jenny Phillips 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: Step One: Prior to the transaction, a potential purchaser negotiates to acquire the stock of a subsidiary of a parent company. Step Two: On the day of the ....
• State Tax Nexus Issues By G. Blane Clark, Jr. and Mattew Meiners 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 foreign state before a tax may be imposed.  Read the entire article.  ....
• IRS Issues Safeharbor Relief for Those Impacted by "Chinese Drywall" By Kevin C. Curry On September 30, 2010, the Internal Revenue Service issued guidance providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.  In particular, the IRS issued Revenue Procedure 2010-36 which enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a ”safe harbor” formula for determining the amount of the loss.In numerous instances, homeowners with certain imported drywall have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors.  In November 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall, levels of hydrogen sulfide in those homes and corrosion of metals in those homes. Revenue Procedure 2010-36 ....
• Cash Donations for Haiti Relief Made Before March 2010 May Be Deducted on 2009 Income Tax Returns By Kevin C. Curry 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 cash contributions eligible for the deduction against last years taxes include contributions made by text message, check, credit card or debit card. The law gives the taxpayer the option of deducting the cash contribution on his or her 2009 return or his or her 2010 return, but not both. The law does not change any of the other rules applicable to charitable donations such as the percentage limitations, the requirement that the charity be a qualified charity or the fact that the taxpayer must itemize in order to benefit from the deduction. Each taxpayer should look at his or her own individual situation to determine whether or not the deduction should be ....
• State of the State: Louisiana Government Active in Green Initiatives By Tokesha Collins During the past few years, the Louisiana Legislature has adopted many “green” initiatives as part of climate and energy policies. The state has placed a strong emphasis on increasing both renewable energy generation and energy efficiency. The following is a list of some of these important initiatives: The Louisiana Renewable Energy Development Act allows Grid Tied Net Metering systems throughout the state, which allows electric utility customers, who wish to install a net metering facility, to reduce their monthly electricity bill by using electricity that is generated from solar, wind, hydroelectric, geothermal, or biomass resources. See La. R.S. 51:3061-51:3063 (2003).   Tax Exemptions for Cogeneration Equipment provide tax exemptions for electric power or energy and any materials or energy sources used to fuel the generation of electric power for resale or used by an industrial manufacturing plant for self-consumption or cogeneration. See La. R.S. ....
• Definition of Component Parts Clarified for Louisiana Sales and Use Tax Purposes By Christopher J. Dicharry and Jason R. Brown On July 7, 2009, Louisiana Governor Bobby Jindal signed Act 442 (SB 9) into law, preserving Louisiana’s long-standing law excluding purchases, rentals and repairs of component parts of immovable property from state and local sales/use tax. Under a law enacted in 2008, purchases of several items previously considered non-taxable component parts of buildings and other immovables (e.g., installed commercial refrigerators and other commercial and industrial fixtures) could have been subjected to state and local sales/use tax. Many taxpayer representatives questioned the constitutionality of the 2008 Act and legislators agreed that it was not their intention to increase sales/use taxes during the 2008 Legislative Session. Act 442 became effective when it was signed by the governor and applies retroactively to all transactions occurring after the July 1, 2008 effective date of the 2008 Act.Under Louisiana’s general tax law, ....
• Law Change Could Hurt Owners of Tax Exempt Properties by Christopher J. Dicharry Owners of exempt property may be hurt by a recent Louisiana law change. Historically, the owners of tax exempt property did not have to confirm that the exemption was being respected by the Assessor by checking the tax rolls during the public inspection period. The owner of exempt property could challenge a tax bill by waiting to receive his tax bill, paying the bill under protest, and then filing a lawsuit in district court. This procedure used to be in La. R.S. 47:2110. As the result of a major rewrite of the Louisiana law on tax sales, La. R.S. 47:2110 was renumbered La. R.S. 47:2134.In addition to renumbering the provision, the Legislature added a change that says exemption challenges must be handled like valuation challenges. The change was effective January 1, 2009. Thus, for 2009 and later years, an owner of exempt property must check the tax rolls during August and September of each year to confirm that exempt property has not been put on the taxable ....
• Regulation and Liability of Accountants Pursuant to Louisiana Law By Charles S. McCowan, Jr. This is the first of a three-part series related to Louisiana law and regulations pertaining to the accounting profession. This part focuses on the historical licensing and regulation of the profession by the State of Louisiana. The Louisiana statutes and regulations governing accountants have become much more sophisticated and comprehensive through the years. In the early 1900s the State’s emphasis was on the qualifications and admission to the practice of public accounting. This continues to be a focus of the state¹s efforts; however, like other learned professions, the Louisiana legislature has adopted additional provisions recognizing the inevitable fact of life that: "Professions once seemingly inviolate from litigation are no longer sacrosanct. The age old axiom that physicians bury their mistakes, while attorneys and accountants file theirs away, has little relevance in modern day America.” The purpose of this article is to ....
• IRS Requires Employer Identification Numbers for Disregarded Entities Beginning in 2009 By Kevin C. Curry Historically, the IRS has said that a disregarded entity could (and maybe should) use the owner's taxpayer identification number for income and other tax purposes. For employment tax reporting, the IRS issued Notice 99-6, 1999-1 CB 321 , which said that employment taxes for employees of a disregarded entity could be reported by a disregarded entity in one of two ways: (1) Calculation, reporting, and payment of all employment tax obligations with respect to employees of a disregarded entity by its owner (as though the employees of the disregarded entity are employed directly by the owner) and under the owner's name and taxpayer identification number; or (2) Separate calculation, reporting, and payment of all employment tax obligations by each state law entity with respect to its employees under its own name and taxpayer identification number.Beginning next year, disregarded entities with employees must have their own employer identification numbers (EIN's) for ....
• Louisiana Property Tax Assessment Review Procedures Arcane by Christopher J. Dicharry Local governments in Louisiana are authorized to impose annual ad valorem property taxes on immovable and corporeal movable property. La. Const. of 1974 art. 6, §§ 26, 27 & 30. Property owners are required to file annual renditions prior to April 1 of each year. La. R.S. 47:2324. Locally elected assessors annually determine the fair market value and assessed value of property based upon the status and condition of taxable property on January 1 of each tax year and are responsible for listing the assessments on the official assessment lists. La. R.S. 47:1952. The assessment lists are open for public inspection during a fifteen day period determined by the assessor. Generally, the fifteen day period must fall between August 15 and September 15 of each year. La. R.S. 47:1992(G). During the fifteen day period, taxpayers may confirm their assessments and discuss changes to the assessments with the assessor. La. R.S. 47:1992(A)(2). Within three days ....
• Property Owners with Hurricane Gustav Damage Entitled to Reduced Property Tax Assessments  By Chris Dicharry Property taxes in Louisiana are based on the fair market value of taxable property. The assessors make the fair market value determination based upon the status and condition of property as of January 1 of each tax year. Certain types of immovable property are generally revalued every four years; however if market conditions suggest changes in fair market value, adjustments can be made during the four year cycle. Most equipment and personal property is valued annually. La. R.S. 47:1978 and La. R.S. 47:1978.1 provide relief provisions for property owners that sustain damage after January 1 due to flooding or a natural disaster.  La. R.S. 47:1978.1, which was enacted after Hurricanes Katrina and Rita, provides that if buildings, structures or personal property are damaged, destroyed, non-operational or uninhabitable due to an emergency declared by the Governor then the assessment of such property should take into account all damage to the property even if the ....
• Getting the "Word" Out - The Department of Revenue Issues Revenue Ruling 07-002 in response to Word of Life Christian Center v. West, 936 So.2d 1226, 2004-1484 (La. Sup. Ct. 4/17/06) by Jenny Norton Phillips On May 22, 2007 the Department of Revenue issued a long-awaited Revenue Ruling detailing its position regarding the case of Word of Life Christian Center v. West, 936 So.2d 1226, 2004-1484 (La. Sup. Ct. 4/17/06). In Word of Life, the Supreme Court determined that two airplanes which were purchased out of state for use in interstate commerce were nevertheless subject to Louisiana use tax as they had become part of the mass of property of the state. The impact of this decision, however, is not limited to airplanes. Many companies purchase various items outside the territorial limits of Louisiana and thereafter import them into the state for use interstate commerce operations.In Revenue Ruling 07-002, issued May 22, 2007, the Department adopted the Word of Life decision which replaced the “ultimate use” test with actual “use” for all transactions occurring after June 30, 2007. Now, any use which is not “bona ....
• Sales Tax Exclusion For Further Processing Materials Under Attack by Christopher J. Dicharry In International Paper, Inc. vs. Cynthia Bridges, 42, 023 (La. App. 2nd Cir. 4/4/07), 2007 WL 983965 (not designated for publication), the Louisiana Court of Appeal, Second Circuit, reinterpreted the “further processing” provision of the Louisiana sales tax law. Under the further processing provision, tangible personal property purchased for further processing into tangible personal property for sale at retail is not subject to Louisiana sales/use tax. La. R.S. 47:301(10)(c)(i)(aa). Historically, Louisiana law had applied a three part test to the identification of a nontaxable further processing material: (1) The further processing material must be a benefit to the end product; (2) The further processing material must be a recognizable and identifiable component of the end product, and (3) A purpose for purchasing the further processing material must have been for processing into the end product. The application of this test ....
• NON-PROFIT ORGANIZATIONS SHOULD PROCEED WITH CAUTION WHEN ENGAGING IN MONEY MAKING OPERATIONS by Hays M. Alexander It is not uncommon for 501(c)(3) non-profit organizations, large and small, to have money making opportunities during their existence. For instance, a larger non-profit organization may have a talented IT department that creates software to benefit the organization, but which can later be marketed to other organizations. In addition, a non-profit organization may receive a bequest of income producing property. Since 501(c)(3) non-profit organizations must be created and operated exclusively for charitable purposes, and not to generate profits, should these organizations ignore these opportunities and miss out on the income that could benefit their just causes, or can they take action? The short answer is that action can be taken but with caution.There are several risks for non-profit organizations engaging in money making operations. First and foremost, non-profit organizations do not want to lose their 501(c)(3) status since the Internal ....
• Untapped Benefits of Louisiana's Pollution Tax Exclusion by Kyle B. Beall Many companies in Louisiana may be aware of the beneficial tax exclusion authorized in La. R.S. 47:301 and LAC 61:I.4302 for pollution reduction projects. What they may not be aware of, however, is the broader scope of Louisiana’s program than most other states. Unlike other states, Louisiana’s exclusion applies to both pollution control devices and pollution control systems. Thus, the Louisiana legislature intended to apply the program to more than simply “end of the pipe” control technology. This more expansive scope may make certain projects in Louisiana more attractive for multi-state companies competing for the same project dollars. La. R.S. 47:301(10)(l) sets forth the statutory basis for the sales and use tax exclusion, and provides:  Solely for purposes of the state sales and use tax, the term “sale at retail” shall not include the sale of a pollution control device or system. Pollution ....
• IRS Issues New Grantor Trust Ruling by Kevin C. Curry On February 16, 2007, the IRS issued a formal ruling approving a sale of a life insurance policy to a grantor trust. This ruling is a rare formal ruling by the IRS in the grantor trust area. Grantor trusts, or intentionally defective grantor trusts, are used often in a variety of estate planning situations. Grantor trusts are typically used in estate planning situations where the parties want the income of the trust to be taxed to the grantor of the trust (the person who set up the trust) or where they want the grantor to be deemed to be the owner of the trust property for income tax purposes. One situation where grantor trusts have been utilized is in restructuring the ownership of a life insurance policy to cure problems which may exist in an existing irrevocable life insurance trust. For example, a person may set up an irrevocable life insurance trust for estate planning purposes. However, if the person’s family or financial situation ....
• Louisiana Assessors Required to Send Notices of Assessment Increases by Christoper J. Dicharry Beginning with the 2006 ad valorem tax year, Louisiana's Assessors have been required to send notice when the taxable assessment of property for a tax year increases by 15% or more from the prior year.  Written notice must be mailed by the Assessor to the address that receives the tax bill no later than the first day of the public exposure period.  La. R.S. 47:1987(B).  The public exposure period is a fifteen day period which must occur between August 15 and September 15 of each year. La. R.S. 47:1992(F).  Valuation and uniformity appeals to the local Boards of Review must be filed shortly after the public exposure period. The new written notice requirement provides a useful tool that will make it easier for taxpayers to manage compliance in Louisiana and reliance on the notice provides the taxpayer with a defense against a claim for additional taxes, interest and penalties. ....