The notion of “electronic discovery” in litigation conjures up images of computer forensic technicians plumbing the depths of servers for fractions of messages and bits of data long thought deleted, or at least forgotten, but quietly slumbering between partially overwritten clusters of memory, waiting to be found. Electronic discovery certainly can mean that. But an electronic discovery case can also be completely mundane from a technological perspective. In either circumstance, the content of electronic files and the process of collecting them for litigation often carry huge implications for the scope–and burden–of discovery, as well as the ultimate outcome of the… Read more

The Bankruptcy Sale Process This article is intended to familiarize you generally with the landscape of an otherwise fairly complicated process involving the sale of assets of a debtor in bankruptcy. It also highlights some of the more important and easily misunderstood issues faced by potential purchasers of such assets. Historically, the principal focus of a Chapter 11 reorganization case was the rehabilitation of the debtor’s business through the proposal and confirmation of a Chapter 11 plan. During the case, the business would be operated by a trustee or the debtor-in-possession while negotiations were conducted with the various constituencies to… Read more

Final overtime regulations are expected to go into effect on August 23, 2004. The U.S. Department of Labor (DOL) recently issued these revised rules in an attempt to simplify and update current overtime exemption requirements. Although these revised rules have been met with mixed reviews, congressional efforts to block the rules have thus far been unsuccessful, and experts believe that the rules will most likely go into effect as intended on August 23, 2004. So what does this mean for you, the employer? At the time of publication of this article, there are fewer than 30 days left before the… Read more

When was the last time you bought or wore clothing made in the U.S.? How about clothing made in Europe (besides specialty items such as suits or leather)? If you have bought clothes recently, you are likely aware that most of the items are imported from a developing country, and it is difficult to find clothing made in the West. Cheap labor in developing countries is certainly a major cause of this trend. However, free trade agreements and programs are also significant factors. Many free trade agreements allow certain textile merchandise to be imported free of duty or at reduced… Read more

Sooner or later, most owners of pricey corporate jets and turboprops realize they cannot sell their aircraft without incurring a substantial income tax liability. As one client recently put it: “Buying an airplane is like getting married — once you’re in, you’re in. If you want out, it will cost you dearly.” The problem arises because many makes and models of corporate aircraft tend to hold their values relatively well in the market but, for tax purposes, the aircraft are rapidly depreciated. The “gap” between an aircraft’s fair market value and its adjusted tax basis represents potential taxable income that… Read more

Perhaps the most frequently asked question of Smith, Gambrell & Russell, LLP’s Estate Planning and Wealth Protection Group is — “Will the federal estate, gift and generation-skipping taxes be repealed during my lifetime?” Our short answer is — “Don’t count on it. Permanent repeal is highly unlikely.” The Status of the Death Tax Permanent repeal has been championed by the present administration and has passed the House of Representatives. In this election year, however, many believe several pieces would need to fall into place for permanent repeal to become a reality. The present administration would need to retain power, and… Read more

Substance abuse by employees — it’s one of the most difficult issues an employer can face. A 2002 national survey on drug use and health conducted by the U.S. Department of Health and Human Services indicated that of 16.6 million adult current illicit drug users, 74.6% (12.4 million users) are in the workforce.1 Previous studies have found that an estimated 6.5% of full-time workers currently use illegal drugs while 8.6% of part-time workers are users.2 The problem is not limited to illegal drug use. Another survey showed that an estimated 6.2% of adults who are full-time employees are heavy drinkers… Read more

ABC Prep School is a secular nonprofit organization that owns and operates a K-8 private school. The school has an enrollment of 200 students, modern facilities, a committed faculty, engaged and generous parents and an active, well-connected board of trustees. The school offers a broad-based curriculum, has after-school programs and athletic teams. XYZ Religious School is a few miles down the road from ABC. It, too, is a nonprofit organization operating a 200-student school. It has a similarly dedicated faculty, board and parents. XYZ produces athletic teams which compete against the rival ABC teams. It offers similar high school preparatory… Read more

IRS Provides Guidance In recent years, a number of Revenue Rulings, private letter rulings and Revenue Procedures issued by the Internal Revenue Service (the Service) have provided guidance on special situations related to tax-deferred exchanges, including reverse exchanges and tenancy-in-common transactions. Revenue Procedure 2002-221 provides guidance for taxpayers seeking to take advantage of Section 1031 of the Internal Revenue Code (the Code) by trading into tenancy-in-common interests in real property, and helps resolve the uncertainty regarding whether tenancy-in-common interests would be classified as partnership interests by the Service. Background on Section 1031 Exchanges Section 1031 of the Code is considered… Read more

What happens when the buyer and seller of a business really want to make a deal but can’t agree on a price? In many cases there is no deal, and the parties go their separate ways. In some cases, however, the parties are able to salvage the deal despite their differences by using an earnout. An earnout is an agreement by the buyer of a business (Buyer) to make payments to the seller or its shareholders (for simplicity, both the seller and its shareholders may be referred to as the Seller) only if the purchased business (Target) meets or exceeds… Read more