Certain contributions made for ownership interests may be taxable events.

When strategically funding your business, certain decisions may affect your tax status. A small business owner may have to recognize gain when acquiring an equity interest in the business if the owner:

An important part of asset protection planning involves legally shielding your wealth and assets from the tax claims of the federal government.

Many small businesses are turning to the Internet when issuing securities and raising capital because it represents a centralized and inexpensive way to solicit potential investors from all across the country.

When raising money for the business, various securities law issues may come into play. You'll need to follow the rules carefully in order to preserve limited liability under the law.

When raising money for the business, various securities law issues may come into play. You'll need to follow the rules carefully in order to preserve limited liability under the law.

When considering securities law issues in forming your business, you'll need to be aware of the impact of federal regulation.

From an asset protection standpoint, a small business owner should be aware of some securities law issues.

The small business owner must consider numerous legal issues before starting business operations if he or she is seeking to effectively limit liability in the business structure. One issue particularly worthy of some discussion is securities law, as it affects the issuance of interests in the limited liability company (LLC) and corporation.

When executing estate planning strategies, the result of transfers to children will often be income-splitting that lowers the family's income taxes. Traditionally, income in a limited liability company (LLC) is divided according to the relative balance in the owners' capital accounts. Because the children will own much, or nearly all, of the business, according to the capital accounts, most of the income would be attributable to the children, if this traditional allocation scheme is used.

John owns a limited liability company (LLC) with a value of $600,000 (value of assets less liabilities). He wants to avoid the estate tax, as he knows the value of his business, and his other assets, will steadily increase above his exemption amount. John owns 100 percent of the business, represented by ownership of one share as a member/manager, and nine shares as a member/non-manager.

Other, more advanced estate planning strategies exist that allow transfers of business interests to the family to be made, without reducing the gift tax exemption.

If you are seeking to transfer business interests to the family, you may encounter complexities if your business is a corporation.

As an alternative to outright transfers of the business interests to the family, the annual gift exclusion (which is $13,000 in 2011) provides a simple opportunity to pass on wealth. Annual gifts that qualify under this exclusion do not reduce the estate or gift tax exemptions.

Now that we've discussed the entity form (the family limited liability company) best suited for transferring business interests to the family, it's time to explain how best to make those transfers.

Many different estate planning strategies can be used to eliminate or, at the very least, significantly reduce estate taxes, ensuring the family's wealth is passed on to the next generation. One such strategy involves transferring business interests to the family through the use of a limited partnership (LP) or a limited liability company (LLC). Parents transfer to their children "discounted" shares in their LP or LLC, without giving up control of the business.

Even with the allowable exemptions and exceptions available to you when planning for federal estate taxes, there is the real possibility that the remaining assets will be taxed at very high rates. To legally avoid this outcome, a number of strategies have been developed over the years that will allow you to pass on wealth to your family.

Generally, if you inherit an asset, your basis in the property is the fair market value of the property at the time of the person's death. This is called "stepped up" basis, because the basis is "stepped up" to its value on the date of the decedent's death. Under the stepped-up basis rules, the income tax basis of property acquired from a decedent at death generally is stepped-up (or stepped down) to equal its value as of the date of the decedent's death (or on the date six months after the date of death, if alternate valuation is elected on the decedent's estate tax return).

With the increased $5 million lifetime gifting exemptions and the $13,000 per donee annual gift exclusion you can transfer significant amounts of wealth tax free. However, the $5M gift exemption has been re-unified with the estate tax exemption, so gifts that reduce the lifetime gift exclusion will reduce the available estate tax exemption.

Recent estate tax reform has resulted in a top estate tax rate of 40% in 2013 and after. The top rate for gift and generation-skipping transfer (GST) taxes, which essentially function to prevent you from avoiding the estate tax, is also 40%.

Tax legislation enacted late in 2010 reinstates the "qualified family-owned business interest deduction," which provides a special consideration for small businesses for decedents dying after 2012. The QFOBI provision had been repealed as unnecessary in light of the larger exemption amounts and the reductions in the estate tax rates that were in effect between 2001 and 2011. Moreover, the provision was often criticized as being unduly complicated and burdensome for the heirs.

Among the basic tenets of estate taxation, this exclusion allows unique opportunities to pass on wealth tax-free.

Among the basic tenets of estate taxation, unified and gift exemptions allow every individual to transfer significant amounts of assets free of estate and gift taxes.

Among the basic tenets of estate taxation, this deduction allows an individual to give during life, or at death, an unlimited amount to a spouse, free of estate and gift taxes. This is termed the "unlimited marital deduction" and is separate from the regular "unified" exemption or the "gift" exemption.

Planning for federal estate taxes is a very complex subject, and anyone hoping to successfully shield hard-earned life-long earnings from the tax collector should consult a professional in this area.