Those running a family-owned business often confuse the concepts compensation and inheritance, columnist Léon Danco explains.
I have to keep coming back to the tax laws, because, in many senses, they represent the collective wisdom about what is fair in the general sense. The tax people have some very definite rules about being paid for contribution. They differentiate inheritance from compensation and stick fairly rigidly to their guidelines. The tax laws, and most of our society, see inheritance as a one-time gift bestowed upon an heir out of the generosity and love of the giver. Nothing in the Internal Revenue Code says that an inheritance has to be earned to be acceptable.