Fort Worth Business Attorney

Areas Of Practice:

Nonprofit Entities - The formation nonprofit corporations along with the preparation and submission of the application for tax exemption is a part of the practice. Texas nonprofit corporation laws refer to nonprofit organizations rather than "not-for-profit" organizations. The term "tax-exempt organization" is derived from the federal income tax laws. Therefore, it is common for an organization to be organized as a nonprofit corporation for state nonprofit corporation law purposes, but yet not qualify as a tax-exempt organization under the federal income tax laws. Alternatively, it is possible for an organization to be formed outside of the nonprofit corporation laws, such as a trust, but yet qualify for federal income tax purposes as a tax-exempt organization. Our society has generally been divided into three "sectors," the governmental, the for-profit, and the nonprofit. For-profit organizations constitute the business and commercial sector of society and exist for the sole purpose of providing income and profits to their owners. The governmental sector includes the various departments, agencies and bureaus of the federal, state and local governments in the United States. The nonprofit sector, or what has sometimes been referred to as the "independent sector," constitutes the remaining classification of organizations within our society.

Included within the nonprofit sector are the churches, schools, hospitals, social clubs, trade associations and the myriad of other types of organizations usually organized as nonprofit organizations. Some of these organizations, such as hospitals and universities, can be organized as either for-profit or nonprofit organizations and, thus, there can be a tension created between the two sectors in terms of the competition that may result. Some representatives of the for-profit sector have complained of alleged "unfair competition" between the nonprofit and for-profit sectors. The distinction between "unfair competition" and mere "competition" has never been satisfactorily defined by the for-profit sector. It is self-evident that any for-profit entity would rather have no "competition" of any kind from any other entity. The unstated reason for such complaints is to forestall or hinder competition from any source, not merely "unfair competition" allegedly engaged in by the nonprofit sector. The reference to "nonprofit" does not mean that a nonprofit organization cannot earn a "profit," in the sense of having an excess of revenue over expenses. Indeed, organizations are permitted to develop, maintain and add to a reserve fund in order to provide the future.

A for-profit corporation has shareholders who own the corporation and has as its principal purpose the making of a profit that will be distributed to such shareholders. Many nonprofit organizations, including those organized under §501(c)(3), are generally not permitted to distribute the excess of revenue over expense (i.e., the organization's "net earnings") to those persons which control its activities. Thus, there is no one person or persons who "own" a nonprofit organization. Modern state nonprofit corporation laws generally provide for the perpetual existence of a nonprofit corporation. A distribution of an organization's net profits to its controlling persons constitutes an incurement of net earnings if the payment is other than reasonable compensation for services rendered or goods provided to the organization. Incurement of net earnings is generally prohibited under the federal income tax laws. Liability for the intermediate sanctions excise tax may also result.

Of course, some nonprofit organizations do provide some degree of private benefit to their members, such as social clubs, which by definition involve a sharing of expenses among the members. Such organizations are exempt under the theory that their activities generally constitute a mere expense-sharing arrangement among its members. For example, country clubs frequently qualify for exemption under §501(c)(7) as social clubs. Any one member could purchase his own golf course if he could afford to do so. By bringing persons together in a club, the members' resources are pooled to buy the golf course, the use of which they presumably share. This expense-sharing theory also explains why the interest income of a social club is taxed as unrelated business income. The members' own interest income would be subject to tax under §61 and thus it is appropriate to tax the social club's interest income, under the expense-sharing theory.

Estate Planning: - The estate tax system consists of a complex set of tax laws that will tax the transfer of your wealth upon your death. It is a transfer tax and not an income tax. The tax is due nine months after your death and are paid out of your estate. The tax is paid with IRS Form 706.

Probate: - Texas has a very streamlined and efficient probate system. For the simplest of estates, the total probate cost can be under $1000. The Texas probate system was reformed in 1954. The fear related to the days when courts abused their authority and attorneys charged a percentage of the estate for their fees still exists today. With proper planning and a knowledgeable attorney, you can avoid any pitfalls. Probate is simply the process of winding up the financial affairs of a person and passing the assets on to his (or her) beneficiaries. Generally, it is assumed that probate has four parts. Collect the assets, pay the debts, pay the taxes, and distribute the balance to the heirs or beneficiaries. Probate also includes admitting the will to probate. That means that a probate judge, by written order, has determined that the document is the last will of the descendent and the property should be distributed accordingly. It is the mechanism used to evidence the transfer of property to the next generation. Factually, under Texas law, a will is of no force and effect until it has been admitted to probate.

Business Law: - Business law matters include the preparation and negotiation of contracts, entity formation, tax analysis of commercial transactions and the oversight of general legal matters for continuing business clients.

Family Limited Partnerships: - Why are family limited partnerships so often used in estate planning these days? There are a number of reasons, including asset protection planning, continuity of management and control of family assets, and the transfer of assets to family members at reduced gift and estate tax costs.