Organization of Transfers of Small and Medium-Sized Enterprises within the Family: Tax Law Considerations

Posted: 9 Nov 2009

See all articles by Per-Olof Bjuggren

Per-Olof Bjuggren

Jonkoping University - Jonkoping International Business School (JIBS)

Lars-Goran Sund

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: 2005

Abstract

The succession options and resulting implications forkeeping ownership of the small to medium-sized family firm within thefamily.For purposes of this analysis, a family firm is one in which amaximum of four persons/families own a majority of the shares with at least oneof the persons/families having an influence on the board of directors and themethod of succession.The options for transition include: selling theshares to an outsider, passing the shares to the next generation during one'slife, or doing nothing, which allows the shares to pass intestate. Focus in this analysis is placed on the transition of the firm during thelife of the current owners.The impact that the inheritance and gift taxeshave on the method and timing of the transfer are considered. Variouscontractual arrangements are examined in light of these taxes, including: awill, a gift, a sale for a price lower than market value, family internaltransition, and a profit company handover. Using the Swedish tax system, which abolished the inheritance and gift taxon January 1, 2005, to aid in the analysis, the complexities of completing alifetime transfer where inheritance and gift taxes are imposed versus wherethey are not imposed are explored. (SRD)

Keywords: Tax law, Inheritance taxes, Gift tax, Taxes, Succession, Family firms, Tax policies

Suggested Citation

Bjuggren, Per-Olof and Sund, Lars-Goran, Organization of Transfers of Small and Medium-Sized Enterprises within the Family: Tax Law Considerations (2005). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1500901

Per-Olof Bjuggren (Contact Author)

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Lars-Goran Sund

affiliation not provided to SSRN

No Address Available

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