News from Williams Coulson

WILLIAMS COULSON EXPANDS ITS CIVIL TRIAL AND APPELLATE LITIGATION PRACTICE DURING 2008

Williams Coulson is pleased to announce the expansion of its civil litigation practice in trial and appellate litigation.  Richard F. Rinaldo has joined Williams Coulson and will serve as the firm’s Chair of Trial and Appellate Litigation.  Mr. Rinaldo has thirty years of experience in civil trial and appellate practices, including major commercial, trade secret, intellectual property and municipal authority litigation.    Mr. Rinaldo is a frequent lecturer and author for the Pennsylvania Bar Institute on a variety of appellate and trial topics.  Most recently, Mr. Rinaldo and Kristen Brown, Prothonotary of the Commonwealth Court of Pennsylvania, served as co-planners earlier this year for a unique program entitled “Preventing Nightmares: Avoiding Waiver and Preserving Issues at Trial and on Appeal.”  Mr. Rinaldo is a member of the Allegheny County and Pennsylvania Bar Associations, and has served as Chairman of the Judiciary Committee of the Allegheny County Bar Association and the Appellate Practice Committee of the Civil Litigation Section of the Pennsylvania Bar Association.   For more than twenty years, Mr. Rinaldo has been an advisor to the University of Pittsburgh Law School moot court team entered in the Cardozo/BMI Entertainment and Communications Law Moot Court Competition, conducted annually in New York City.    Mr. Rinaldo received his B.A. cum laude from the University of Maryland and graduated magna cum laude from Boston College Law School, where he was elected to the Order of the Coif, the Boston College Law Review and the Boston College National Moot Court team.  At graduation, Mr. Rinaldo received the Joseph Oteri award for excellence in moot court activities.  Following law school , Mr. Rinaldo served as law clerk to Associate Justice Ruth I. Abrams of the Massachusetts Supreme Judicial Court. 

We are pleased to announce our move to a new office location
Effective February 23, 2007

One Gateway Center 420 Fort Duquesne Boulevard Suite 1600 Pittsburgh, Pennsylvania  15222 (412) 454-0200 (412) 281-6622 facsimile

 We look forward to serving you in our new location

Hoyt on Employment Tax Advantages of S Corps Over LLCs

Hoyt_3Continuing his examination of the LLC v. S Corp choice of entity question, Christopher R. Hoyt (Missouri-Kansas City) weighs in on the employment tax considerations:

An important choice-of-business entity consideration concerns employment taxes. A sole proprietor of a service business will pay both the employer and employee share of OASDI and health insurance taxes (with minor adjustments) on all earned income. The same result occurs if the person forms a single-member LLC. If, however, that individual forms an S corporation and takes a small salary, some of the profits will be taxed to the shareholder without being subject to employment taxes. This was a political issue during the 2004 election when the newspapers reported that Senator Edwards, the Democratic Vice-Presidential candidate, saved thousands of dollars through his S corporation law practice [blogged here].

So how much money are we talking about?

Looking at S Corporations that were owned by one individual who pays himself / herself a salary, an average of 41.5% of profits was paid to the owner as salary in 2001. The remaining 58.5% of the income was taxed to the owner but avoided social security and employment taxes. The 41.5% figure is down from an average of 47% in 1994. See this Senate Report with several graphs, including this one:

Page_6

With testimony like this in the Senate, it seems to me that it will only be a matter of time before we have legislation to put S corporations on par with LLCs when it comes to employment taxes. If that happens, then from a federal tax perspective it seems to me we should see more LLCs. Interesting, though, how some states have franchise taxes that discourage LLCs.

Update: Joe Kristan offers detailed commentary here.


 

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