Accounting
IRS forces sale of LLC on innocent co-owner
One of the attractive features of doing business through a limited liability company is the protection it gives from personal liability — but that is not always the case, as a New Jersey dentist recently discovered when the Internal Revenue Service sought to foreclose on a dental practice he co-owned with another dentist.
Dr. William Vockroth co-owned his practice with another dentist, Dr. Thomas Driscoll, via an LLC, and co-owned the physical property as tenants in common. The government sought a forced sale of both the entire practice and the physical office suite to satisfy Driscoll’s tax debt. While Vockroth owed no tax, the district court consented to the forced sale of the interests of both parties.
Under Code Section 7403, the government has the authority to foreclose on the entire property, and not merely on the delinquent taxpayer’s own interest, according to tax attorney Barbara Weltman, author of “Small Business Taxes 2025.” Nevertheless, she was surprised at the decision.
“One of the mantras regarding corporate LLCs is that they give you personal liability protection,” she said. “The government didn’t just go after the delinquent taxpayer’s interest in the LLC; they went after the entire business.”
In arriving at its decision, the court considered Vockroth’s contention that a “charging order” is the only appropriate remedy. The court said that “although New Jersey law allows a charging order as the sole remedy of a judgment creditor, the government is not bound by the state laws of an ordinary creditor when it forecloses pursuant to Section 7403.”
Next, the court analyzed the case according to a four-factor balancing test in the Supreme Court decision in Rodgers:
- The extent to which the government’s financial interests would be prejudiced if it were relegated to a forced sale of the partial interest actually liable for the delinquent taxes;
- Whether the third party with a non-liable separate interest in the property would, in the normal course of events, have a legally recognized expectation that a separate property would not be subject to a forced sale by the delinquent taxpayer or their creditors;
- The likely prejudice to the third party, both in personal dislocation costs and in practical undercompensation; and,
- The relative character and value of the non-liable and liable interests held in the property.
The court noted that unlike joint tenants or tenants by the entirety, tenants in common do not need to specify their preferred ownership type during an acquisition or transfer of property: “Each tenant in common may transfer his interest without the consent of the remaining cotenant.”
“Under New Jersey law, either tenant in common may ask the court to grant a partition. When it would not be possible for a court to partition the property in such a way that gives each party the requisite amount of ownership stake without great prejudice to the owners, a court may direct the sale thereof,” it noted.
Of the four factors, the court found the second one to be the only one that favored Vockroth, while the others were either neutral or favored the government.
“As to the LLC, the second factor weighs in favor of Dr. Vockroth,” the court said. “In the case of the LLC the government and defendant disagree as to the extent of state law applicability.”
It said that the government was correct in arguing that New Jersey law will not preclude the court from ordering a forced sale, but the property interests provided under state law were still relevant to the court’s inquiry under the second factor.
The court then found that New Jersey law, which adopts the Revised Uniform Limited Liability Company Act, requires the consent of all members in an LLC to sell, lease, exchange or otherwise dispose of all or substantially all of the company’s property. Since Vockroth did not consent to a sale, the court found that this factor — the practice being held by the LLC — weighed against the forced sale and in favor of Vockroth. In weighing all the factors together, the court decided in favor of the government’s motion for summary judgment.
“The lesson here is you have to look very closely at whom you’re going into business with,” said Weltman.
Significant changes are in store for President Donald Trump’s signature $3.9 trillion tax-cut bill as the Senate begins closed-door talks this week on legislation that squeaked through the House by a single vote.
Senate Republican leaders are aiming to make permanent many of the temporary tax cuts in the House bill, a move that would increase the bill’s more than $2.5 trillion deficit impact. But doing so risks alienating fiscal hawks already at war with party moderates over the bill’s safety-net cuts.
It amounts to a game of chess further complicated by the top Senate rules-keeper, who will decide whether some key provisions violate the chamber’s strict rules. Jettisoning those provisions — which include gun silencer regulations and artificial intelligence policy — could sink the bill in the House.
House Republicans’ top tax writer, Representative Jason Smith, on Friday said that senators need to leave most of the bill untouched in order to ensure it can pass the House in the end.
“I would encourage my counterparts, don’t be too drastic, be very balanced,” he said.
The wrangling imperils Republicans’ goal of sending the “Big, Beautiful Bill” to Trump’s desk by July 4. But the real deadline is sometime in August or September, when the Treasury Department estimates the US will run out of borrowing authority.
The House bill would raise the government’s legal debt ceiling by $4 trillion, which the Senate wants to increase to $5 trillion in order to push off the next fiscal cliff until after the 2026 congressional elections.
That’s just one of the major changes the Senate will weigh in the coming weeks. Here are others:
Permanent business breaks
Senate Finance Chairman Mike Crapo’s top priority is making permanent the temporary business tax cuts that the House bill sunsets after 2029. These are the research and development tax deduction, the ability to use depreciation and amortization as the basis for interest expensing, and 100% bonus depreciation of certain property, including most machinery and factories.
Senate Republicans plan to use a budget gimmick that counts the extension of the individual provisions in the 2017 Trump tax bill as having no cost. That gives them room to make the additional business tax cuts and possibly extend some of the new four-year individual cuts in the House bill like those on tips and overtime.
Deficit hawks could demand new offsets, however, either in the form of spending cuts or ending tax breaks like one on carried interest used by private equity.
Stefani Reynolds/Bloomberg
The SALT cap
The House expanded the state and local tax deduction limit from $10,000 to $40,000 to get blue-state Republicans behind the bill. But SALT isn’t an issue in the Senate, where high-tax states like California, New York and New Jersey are represented by Democrats.
“I can’t think of any Senate Republicans who think more than $10,000 is needed and I can think of several who think the number should be zero,” said Rohit Kumar, a former top Senate staffer now with Big Four firm PwC.
That includes deficit hawks like Louisiana’s John Kennedy, who has balked at the House’s SALT boost.
Senators could propose keeping the current $10,000 SALT cap as a low-ball counter, forcing the House to settle from something in the ballpark of a $30,000 cap, Kumar said.
The Senate could also change new limits on the abilities of passthrough service businesses to claim SALT deductions.
Green energy tax credits
Moderate Republicans in the Senate are pushing back on provisions in the House bill that gut tax credits for solar, wind, battery makers and several other clean energy sectors.
Senator Lisa Murkowski of Alaska said she’s seeking to soften aggressive phaseouts of tax credits for clean electricity production and nuclear power. She has the backing of at least three other Republicans, giving her enough leverage to make demands in a chamber where opposition from four GOP senators would kill the bill.
Their demands will run headlong into ultraconservatives, who already think the House bill doesn’t get rid of tax benefits for clean energy fast enough.
Medicaid, Food Stamps
Senators Rand Paul of Kentucky, Rick Scott of Florida, Mike Lee of Utah and Ron Johnson of Wisconsin say they’re willing to sink the bill if it doesn’t cut more spending.
“I think we have enough to stop the process until the president gets serious about reductions,” Johnson said recently on CNN.
They haven’t made specific demands yet, but they could start off where the House Freedom Caucus fell short — cutting the federal matching payment for Medicaid for those enrolled under Obamacare and further limiting federal reimbursement for Medicaid provider taxes charged by states.
Conservatives’ demands are in stark contrast to Republican senators already uncomfortable with the new Medicaid co-pays and state cost-sharing for Medicaid and food stamps in the House bill. Senators Josh Hawley of Missouri, Susan Collins of Maine, and Jim Justice and Shelley Moore Capito of West Virginia join Murkowski in this camp.
Boosting their case is Trump, who told the Freedom Caucus to stop “grandstanding” on more Medicaid cuts.
Regulatory matters
There’s an extensive list of regulatory matters in the House bill that could be struck if they are found to break Senate rules for averting a filibuster and passing the legislation by a simple majority.
Provisions likely to be challenged for not being primarily budgetary in nature include a repeal of gun silencer regulations, preemption of state artificial intelligence regulations, staffing regulations for nursing homes and abolishing the Direct File program at the Internal Revenue Service.
The House bill’s provisions limiting the ability of federal judges to hold administration officials in contempt, ending funding for Planned Parenthood, requiring congressional review of new regulations and easing permitting of fossil fuel projects are also vulnerable.
The biggest Senate rules fight will be over using the “current policy” budget gimmick to lower the cost of the bill. Senate Republican leaders could explore bypassing rules keeper Elizabeth MacDonough if she finds the accounting move breaks the rules.
Battles over these provisions could take weeks.
“I think it would be very difficult to get it out of the Senate quickly,” said Bill Hoagland, a former top Republican Senate budget staffer now with the Bipartisan Policy Center.
Spectrum sales as pay-fors
A major auction of government radio spectrum that would generate an estimated $88 billion in revenue is another unresolved fight.
Ted Cruz of Texas, the Senate Commerce chair, backs the spectrum sale but Senator Mike Rounds of South Dakota has vowed to protect the Defense Department, which has warned auctioning off its spectrum would degrade its capabilities and cost hundreds of billions for retrofits.
The proposal would free up key spectrum for wireless broadband giants like Verizon and Elon Musk’s Starlink.
The estate tax
Majority Leader John Thune and 46 other Republican senators back a total repeal of the estate tax, which would likely cost several hundred billion dollars over a decade, benefiting the heirs of the richest 0.1%. That could make it too pricey for the Senate to include.
The House bill permanently increases the estate tax exemption to $15 million for individuals and $30 million for married couples, with future increases tied to inflation.
Private-equity backed accounting firm Ascend has added Florida Regional Leader firm Saltmarsh, Cleaveland & Gund and California-based Glenn Burdette to its platform, effective June 1.
Saltmarsh, Cleaveland & Gund, based in Pensacola and Tampa, Florida, and Glenn Burdette, in San Luis Obispo, California, are the latest firms to join Arlington, Virginia-based Ascend, which is backed by private equity firm Alpine Investors and ranked No. 29 on Accounting Today‘s
Glenn Burdette formerly operated under an employee stock ownership plan and adds a central California presence to Ascend along with a team of 75 and seven partners, while Saltmarsh marks Ascend’s first Florida footprint and adds a team of 16 partners and 178 total team members to the firm.
Ascend reported $314.74 million in revenue and 1,464 employees in 2024.
Terms of both deals were not disclosed.
“These are two monumental partnerships for Ascend,” said Ascend president Nishaad in a statement. “Glenn Burdette was founded 60 years ago, and in 2000 became the first CPA firm in California to form an ESOP. That decision marked the firm’s commitment to a set of core values that they still wear on their sleeve today – a desire to provide opportunity for their people, a focus on shared ownership as an enabler of success, and a fierce commitment to hold the pen on their own story.”
Glenn Burdette provides tax, audit, bookkeeping, business consulting and financial management services, primarily to middle-market and small owner-managed businesses.
“Partnering with Ascend is the right move at the right time for Glenn Burdette,” said the firm’s CEO David Merlo. “Their forward-thinking approach and shared values make them a natural fit for our next chapter. We chose Ascend because of their strong commitment to reimagining what’s possible — for both our clients and our people.”
Saltmarsh, Cleaveland and Gund is a full-service accounting and advisory firm offering expertise and specialized consulting for many industries and high-net-worth individuals.
“Saltmarsh has an equally proud history, with an 80-year legacy in Florida’s panhandle and central cities,” said Ruparel in a statement. “The firm is synonymous with quality, is a longstanding best-place-to-work, and has a dynamic group of partners that are seen as trusted advisors across disciplines. Less than a year ago, Lee Bell and the Saltmarsh leadership team took the time they needed to articulate a strategic vision that would carry the firm into the next decade and enumerate a plan for achieving that vision. We feel privileged that they decided Ascend is best positioned to help them fulfill those ideals.”
“The success of our business is entirely about putting our people first so they can do what they love, which is helping our clients achieve success,” said Saltmarsh Advisors CEO Lee Bell in a statement. “Ascend’s intense focus on people and their unique concentration on supporting our more than 80-year legacy as Saltmarsh is why we made the decision to partner with them.”
Both Glenn Burdette and Saltmarsh are independent members of the BDO Alliance.
Since Ascend was launched in early 2023, it has made a significant number of investments, including including
Intuit has reported strong third quarter growth, with the company reporting total revenue of $7.8 billion, an increase of 15 percent. Within this revenue growth, Intuit’s Credit Karma grew the most, raking in $579 million during the third quarter, a 31 percent increase, driven by credit cards, personal loans and car insurance.
With this growth in mind, Intuit is optimistic about its future prospects and has raised its full year guidance for FY2025 as a result. The company now expects to end the year with $18.760 billion, which would represent a roughly 15% annual growth, higher than the previously expected 12-13% growth. GAAP operating income is expected now to grow 35% versus the previously-anticipated 28-30%; non-GAAP income, similarly, is anticipated to grow 18% versus 13-14%.
Business solutions revenue is expected now to grow about 16%, the consumer group is expected to grow about 10% (versus 7-8% previously), the ProTax group is expected to grow 3-4% and Credit Karma is expected to grow 28% (versus 5-8% previously).
Within the consumer group specifically, TurboTax Live is expected to grow 47%, to $2 billion; TurboTax Online is expected to grow about 6% on share gains and average revenue per return is expected to grow 13% as more customers choose assisted offerings. Meanwhile, the number of customers who use TurboTax for free is expected to go down from 10 million last year to 8 million this year.
Intuit CEO Sasan Goodarzi attributed this rapid growth to its AI investments.
“We have exceptional momentum with outstanding performance across our platform. We’re redefining what’s possible with AI by becoming a one-stop shop of AI-agents and AI-enabled human experts to fuel the success of consumers and small and mid-market businesses,” said Sasan Goodarzi, Intuit’s chief executive officer. “We had an outstanding year in tax, including a significant acceleration in TurboTax Live revenue growth as we disrupt the assisted tax category.”
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