Skip to content
MS-Logo-UP
Client Reviews

1.800.481.2180

  • Contact Us
  • Home
  • Blog
  • What We Do
    • Business Compliance Services
    • Business & Contracts
      • Choosing a Business Lawyer for NC Corporations and Other Small Business
      • The Number One Problem for Small Limited Liability Companies
      • How To Dissolve a Corporation in North Carolina?
      • 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 2) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 3) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 4) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 5) 5 Considerations as to Your Business’ Negative Internet Review
      • Are Negative Reviews Really Bad for Business?
    • Limited Liability Company
      • Your New LLC – Part 1: The Basics
      • New LLC: Maintaining Limited Liability Protection
      • Your New LLC – Part 3: Federal, State and Local Registration, Licensing and Permitting
      • “Your New LLC” – Part 4: Transacting Business in Another State
      • “Your New LLC” – Part 5: Moving Your LLC to Another State
    • Mortgage & Foreclosure
      • Hearing Results
      • Mortgage Problems – Should You Trust Your Lender or Loan Servicer?
      • When to Hire an Attorney for Foreclosure and Mortgage Relief
      • Mortgage Loans: Recourse versus Non-Recourse and Foreclosure Related Deficiency Judgments
      • Negotiating with a Bank: Why do I have to Provide My Financials?
      • Can the HOA (Homeowners’ Association) Foreclose on my Home?
    • Real Estate Cases
      • Breach of NC Real Estate Purchase Contract – Buyer’s Damages in NorthCarolina
      • Private Mortgage Insurance (PMI) – What is the Borrower Really Paying for?
    • Real Estate Closings
    • Disputes & Lawsuits
      • Business Contracts: What Should Yours Say Regarding Recovering Attorneys’ Fees in Case of Dispute? (Part 1)
      • Business Contracts: What Should Yours Say Regarding Recovering Attorneys’ Fees in Case of Dispute? (Part 2)
      • Arbitration versus Mediation
      • Responding to a Lawsuit Complaint
    • Tax & IRS Matters
      • S-Corp Tax Election for LLC
      • Comparison of Subchapter K v. Subchapter S
      • Employment Tax Considerations in Starting a Business
      • Is your Worker an Independent Contractor? (The IRS Cares!)
    • Wills, Trusts & Estate Planning
      • Congrats, You’ve Inherited a Mess
      • When Should I Write a Will?
      • Top 5 Reasons to Change Your Will
    • Prenuptial Agreements
      • Recently Engaged? 5 Reasons Why You Should Consider A Prenup
    • Other Practice Areas
      • Indemnification in Contracts: What if Both Parties Are at Fault?
      • Indemnification in Contracts: Should You at Least Have to be Guilty as Charged?
      • Venue Clauses in Contracts – Beware Listing Only the County and State
    • Limited Scope Services
      • Arbitration Agreement: How to Get to Arbitration if A Lawsuit Was Filed First
      • Follow the Contract’s Arbitration Clause or File a Lawsuit?
      • Arbitration: setting the rules and identifying which arbitration organization will be used
      • Why does your Corporation or Company Need a Registered Agent?
  • Who We Are
    • Jason A. McGrath
    • James M. Spielberger
    • Kelly J. Brown
    • Todd E. Gonyer
    • Trent Grissom
  • Where We Practice
  • Client Services
    • Helpful Resources
    • News & Updates
  • Consultations
    • About McGrath & Spielberger’s Intake Form

Category: Life and the Law

Comparison of Subchapter K v. Subchapter S

Posted on July 25, 2022December 18, 2023 by g83js92js91
Categories: business, internal revenue code, IRS, Life and the Law, limited liability company, llc, small business, starting a business, subchapter K, subchapter S, tax, tax attorney, Tax Issues, Tax Law
Depositphotos 7352892 s

Both Subchapter K and S of the Internal Revenue Code (IRC) are pass-through tax structures in which the members of the entity are taxed for the entity’s income, gains, losses, and expenses on their individual tax returns. That is where the similarities end.

There are several differences discussed below that make Subchapter K seem more taxpayer friendly than Subchapter S. Much of the popularity of the LLC is attributable to the fact that LLCs offer limited liability to all investors combined with the more flexible partnership tax regime. In some situations, however, the goals of the business owners may be better achieved with an S corporation.

Subchapter S places very strict restrictions on the ownership and capital structure for S corporations.  S corporations are limited to 100 shareholders (although members of a “family,” broadly defined, are counted as one shareholder), and they may not have more than one class of stock.  Additionally, all shareholders much be individual U.S. citizens or residents and other corporations or partnerships cannot be shareholders of the company.  Anyone can be a member or partner of an entity taxed under Subchapter K.

Partnerships and LLCs taxed under Subchapter K may make special allocations of income and deduction items, while shareholders of an S corporation must include corporate income and loss on a pro rata share basis.  Thus, partners/members may agree to share certain income or deductions disproportionately, and the agreement will be respected for tax purposes if it reflects their economic business deal.  Additionally, in most cases, partnerships and LLCs taxed under Subchapter K, can distribute appreciated property in kind without immediate recognition of taxable gain.

In a business with only a few owners, an S corporation may be the entity of choice because the flexibility of Subchapter K is not needed.  S corporations are often used by owners that prefer to conduct their business as a state law corporation instead of a partnership or limited liability company because they are more comfortable with the corporate governance structure.  S corporations are also often used by service providers to minimize their exposure to employment taxes.  S corporations are not viable options in many situations – a business with foreign investors would not be able to make the S corporation election because foreign investors are not permissible S corporation shareholders.  Additionally, many institutional investors (e.g., tax-exempt pension funds and charitable organizations) are discouraged by the tax system from investing in any type of active business that is operated as a pass-through entity.  Venture capital funds, which provide a large source of capital for start-up companies, appear to be more comfortable using the familiar C corporation capitalized with several classes of stock, a structure not available in an S corporation.

McGrath and Spielberger logo seal

For a complete analysis of the tax implications of C Corporations, Partnerships, and S Corporations click here for the Joint Committee on Taxation’s publication entitled “Choice of Business Entity: Present Law and Data Relating to C Corporations, Partnerships, and S Corporations.”

Contact us regarding your business law matter. Click here

Posted in business, internal revenue code, IRS, Life and the Law, limited liability company, llc, small business, starting a business, subchapter K, subchapter S, tax, tax attorney, Tax Issues, Tax Law

Recently engaged? 5 reasons why you should consider a prenup

Posted on November 21, 2018April 21, 2022 by g83js92js91
Categories: attorney, Kelly Brown, lawyer, Life and the Law, North Carolina, Prenupital Agreements, prenuptial agreement, south carolina
gold engagement rings, wedding bands, time for a prenup

As most of my friends are getting married or are recently married (myself included), I frequently get asked why anyone would want a prenuptial agreement. Prenups can get a bad reputation because many people assume signing a prenup means you are preparing for divorce in the future. However, this is NOT necessarily the case! There are many reasons (other than divorce) that future spouses may want to sign a prenup before getting married.

Here are my top 5 reasons for signing a prenup.

  • A prenup promotes communication between future spouses so they are fully aware of the other’s financial situation and other issues prior to marriage. In North Carolina and South Carolina, each party must voluntarily provide a full and fair financial disclosure about his or her property and financial obligations (unless waived in writing).
  • A prenup can establish how property matters will be handled in the future. If you are a person who has substantial individual or family assets, a prenuptial agreement may be a great way to specify how debt and other financial issues will be handled during the marriage.
  • A prenup can determine the rights and obligations of each party with regard to the right to buy, sell, use, transfer, exchange, abandon, lease, or otherwise dispose of, control, or manage certain property. In North Carolina and South Carolina, property obtained during the marriage is generally treated as marital or joint property, but a prenup can change the general rule for property acquired during the marriage.
  • A prenup can protect a person that has a professional practice or other service business. For all the entrepreneurs out there, this is a great way to protect your hard work, while still being able to provide for your new family.
  • A prenup can be viewed as a proactive dispute resolution system, as it can simplify the divorce process. A prenup may reduce the chance of litigation upon divorce and, in addition, reduce those litigation costs. This may be beneficial for a party that is entering into a second marriage or those who have children from previous relationships.
Contact us today to get started on your prenuptial agreement.

 

prenupt agreement blog

Save

SaveSave

Posted in attorney, Kelly Brown, lawyer, Life and the Law, North Carolina, Prenupital Agreements, prenuptial agreement, south carolina

Being Sued by a Mortgage Insurance Company for an Insurance Policy you Paid for?

Posted on May 28, 2018April 21, 2022 by g83js92js91
Categories: CitiMortgage, Deed in Lieu, foreclosure, homeowners, Jason A McGrath, Life and the Law, mortgage loan, North Carolina, PMI, private mortgage insurance, Private Mortgage Insurance (PMI), Real Estate, short sale

As attorneys who provide a variety of real estate and mortgage related services, including foreclosures and post-foreclosure disputes, we know that many (most?) borrowers really don’t understand private mortgage insurance. Known as PMI, private mortgage insurance is to benefit the lender, not the borrower – even though the borrower is paying for it.

What makes it worse from the borrower’s perspective is that, in addition to being foreclosed on, a borrower can end up being sued by the mortgage insurance company in relation to the very same policy the borrower paid for. The highly technical terms we use to describe this include:

Technical terms

We’ve advised and defended borrowers in these cases. The most common fact scenario is this one:

  • a foreclosure takes place (or sometimes even a short sale or a deed-in-lieu of foreclosure);

 

  • the loan is not paid off in full;

 

  • the creditor (lender / loan note holder) makes a claim against the private mortgage insurance policy;

 

  • the mortgage insurance company pays the creditor to reimburse it for its losses on the loan;

 

  • the mortgage insurance company sues the borrower / former homeowner, under the theory of “We only had to pay out on this policy because you didn’t pay the loan off in full, so you owe us”; and
  • the borrower is shocked, comes to us for help.

We’ve seen cases in which the mortgage insurance company may not actually have paid out the money it was seeking to recover, in which the mortgage insurance company was unable to even produce the insurance policy at issue, and in which the borrower has been assured by the persons involved in the deal (before our involvement) that the borrower was going to be “free and clear” after a foreclosure, short sale, or deed-in-lieu. However, we’ve also seen cases in which the borrower did appear to legally owe the monies being sought by the insurance company.

These cases usually – in our experience and based on our assistance – go away without the borrower having to pay what the mortgage insurance company is seeking. However, each case and each client is different, and no guarantees or predictions can be made. The bottom line is that anyone wanting to reach a settlement with the lender / note holder before the property is disposed of and anyone who has been notified of a claim against them related to PMI should be educated and informed and perhaps seek professional assistance. 

McGrath & Spielberger, PLLC provides legal services in Florida, Georgia, North Carolina, Ohio, South Carolina, and Tennessee, as well as in some Federal courts. The Firm offers full scale representation, as well as limited scope services, as appropriate for the situation. Please be advised that the content on this website is not legal advice, but rather informational, and no attorney-client relationship is formed without the express agreement of this law firm. Thank you.
Posted in CitiMortgage, Deed in Lieu, foreclosure, homeowners, Jason A McGrath, Life and the Law, mortgage loan, North Carolina, PMI, private mortgage insurance, Private Mortgage Insurance (PMI), Real Estate, short sale

What Factors Should You Consider When Starting a Business?

Posted on March 7, 2018April 20, 2022 by g83js92js91
Categories: business law, corporation, forming business, Life and the Law, limited liability, llc, North Carolina, online legal services, partnership, s corporation, single member llc, start-up business
Startup Business People Group 251096971When you decide to start a business venture, there are a myriad of things to consider.  You have possibly already chosen the purpose of your venture and what it is you are going to make, do, or sell.  You have probably also played around with what to name your business.  Now what?  Where do you go from here?

We regularly assist small business owners, especially start-up businesses, walking them through the steps that need to be taken in order to make the business official and legal.  There are many ways a business can be organized and there are non-tax factors, tax factors, and state statutory requirements that need to be taken into consideration when embarking on this exciting journey of starting a business.

This article focuses on a few of the non-tax factors that need to be considered.  A follow-up article will discuss the tax factors of organizing your business.  Much of the information in this article relates to the laws in a majority of jurisdictions along with examples of specific instances where North Carolina law is different from the majority of jurisdictions.  The statutory requirements of starting a business are state specific, therefore it is important to seek the assistance of a professional who knows the law in your jurisdiction.  There are also state and local licensing as well as registration requirements that will need to be met depending on the jurisdiction your business will be located in.

In the tables below the entities are listed from the broadest/most flexible to the most restrictive.

limited liability3 pt 1

Limited liability is probably the most sought after attribute of business owners forming a new business venture.  New business owners wish to protect their personal assets from the claims of business creditors.  This can usually be achieved by organizing the venture under a state law that limits the owners’ liability to the amount of capital the owner has invested in the entity.  Be very careful when capitalizing the business and applying for loans.  Some lenders may require that the owner(s) of the business provide a personal guarantee for the business obligations, thereby making the owner liable to those creditors of the business and defeating the purpose of the limitation of liability.

management and control1 pt 2
capital structure pt 3
transferability of interests pt 4
transferability of interests pt 4 1

The business lawyers McGrath & Spielberger, PLLC assists clients with all sorts of tax, business, and estate planning matters in North Carolina.  Click here to contact us about your tax, business, or estate planning matter today.

Posted in business law, corporation, forming business, Life and the Law, limited liability, llc, North Carolina, online legal services, partnership, s corporation, single member llc, start-up business

Why does your Corporation or Company Need a Registered Agent?

Posted on August 26, 2016December 18, 2023 by g83js92js91
Categories: attorney, business, business law, Business Law & Contracts, corporation, Jason A McGrath, Life and the Law, limited liability company, llc, McGrath amp; Spielberger, North Carolina, registered agent, small business
In this video, business law attorney Jason McGrath explains what a registered agent is, what it does, and why it’s legally required.

This discussion focuses on registered agents in North Carolina, but most of this information will *generally* apply to other states – but you need to study the specifics for your state, of course.

https://youtu.be/WuBeC-UVHew

If you are in need of legal assistance for your business in North Carolina, South Carolina, Tennessee, Georgia or Florida please fill out our confidential client intake form.

logo2Bseal2Blarge

Posted in attorney, business, business law, Business Law & Contracts, corporation, Jason A McGrath, Life and the Law, limited liability company, llc, McGrath amp; Spielberger, North Carolina, registered agent, small business

NC Home Foreclosure Hearings – Should the Borrower Attend?

Posted on August 12, 2016May 2, 2022 by g83js92js91
Categories: attending a hearing, foreclosure, foreclosure hearing, Foreclosures amp; Mortgage Loan Relief, hearing attendance, Jason A McGrath, Lenders amp; Mortgage Loan Servicers, Life and the Law
In this video attorney Jason McGrath explains why a borrower should attend the foreclosure hearing in a home foreclosure occurring in North Carolina.

https://youtu.be/Xhua-sxbkLs

If you are facing a foreclosure situation in North Carolina please fill out our confidential client intake form for legal assistance.

logo2Bseal2Blarge

Posted in attending a hearing, foreclosure, foreclosure hearing, Foreclosures amp; Mortgage Loan Relief, hearing attendance, Jason A McGrath, Lenders amp; Mortgage Loan Servicers, Life and the Law

Kelly Brown Earns LL.M. in Tax Law

Posted on March 5, 2016April 25, 2022 by g83js92js91
Categories: Announcements, Kelly Brown, Life and the Law, llm, McGrath amp; Spielberger, North Carolina, south carolina, Tax Issues, Tax Law, The Legal Profession
graduation cap law

 

McGrath & Spielberger, PLLC is happy
to announce that Attorney Kelly J. Brown has
earned her LL.M in Tax Law.

Attorney Kelly J. Brown has earned her LL.M. (Master of Laws) in Taxation from Boston University School of Law. Kelly is licensed in both North Carolina and South Carolina. Her practice focuses on real estate matters, including closings; business law matters; and of course, tax matters.

Posted in Announcements, Kelly Brown, Life and the Law, llm, McGrath amp; Spielberger, North Carolina, south carolina, Tax Issues, Tax Law, The Legal Profession

Tax Rates on Ordinary Income for Businesses

Posted on August 19, 2015April 25, 2022 by g83js92js91
Categories: business law, Business Law & Contracts, business owners, income, Life and the Law, North Carolina, Tax Issues, tax rates

When you decide to start a business venture, there are a myriad of things to consider. We regularly assist small business owners, especially start-up businesses, walking them through the steps that need to be taken in order to make the business official and legal. There are many ways a business can be organized and there are both non-tax and tax factors as well as state and local statutory requirements that need to be taken into consideration when embarking on this exciting journey of starting a business.

I previously wrote an article regarding the non-tax factors that should be considered when starting a business. This article is one of a series of articles that focuses on the tax implications of certain business activities and things you should consider when choosing your business entity. The most prominent federal tax considerations in choosing a business entity include:

  • Capital Contributions

 

  • Ownership Restrictions

 

  • Business Income and Loss

 

  • Allocations of Income or Loss

 

  • Basis Limitations and the Deductibility of Losses

 

  • Distributions

 

  • Employment Tax Considerations

 

  • Tax Rates on Ordinary Income

This article discusses the tax rates for businesses and business owners.

Ordinary Income Tax Rates

For most C corporations that have significant taxable income, the corporate income tax rate is essentially a flat rate of 34-35%. Corporations with smaller amounts of income enjoy lower rates (15-25%) on their first $75,000 of taxable income. As you can see below, a very small number of small businesses will receive the lower tax rates of 15 and 25%.

corporate tax rates

Additionally, certain personal service corporations (i.e., lawyers, accountants, architects, and the like) are not entitled to graduated tax rates but receive a flat rate of 35%. Individuals pay tax at the graduated rates of 15%, 28%, 31%, 36%, and 39.6%.

With a presidential election fast approaching and presidential hopefuls throwing their hat in the ring, you can expect some campaign talk of tax reform. On the corporate side, Marco Rubio has talked about tax reform that would lower the tax rate for corporations and passthroughs to 25% (although many of the credits and deductions would be eliminated) and allow businesses to expense the cost of their investments 100% in the year of acquisition. On individual tax reform, Rubio proposes reducing the number of individual tax brackets from 7 to 2 (15% and 35%), eliminate the standard deduction and replace it with a refundable personal credit, and create a $2,500 child tax credit.

Depositphotos 6663610 sacks of money

The relationships among these tax rates can greatly influence the choice of entity. At one time the maximum individual tax rate on ordinary income peaked at 70% and the top corporate tax rate was 46%, making forming a C corporation an attractive option to avoid the higher individual tax rates. The difference in rates prompted most business owners to organize their entities as a corporation rather than a pass-through entity because corporate income was taxed at much lower rates. During these high individual tax rate times, shareholders that wished to withdraw earnings created tax efficient strategies to avoid the double tax (e.g., owner-employees of a C corporation would distribute profits in the form of salary or fringe benefits, which are tax-deductible by the corporation and the fringe benefits are excludable from income of the employee in most situations). Shareholders also loaned money or leased property to C corporations and withdrew earnings from the corporation in the form of rent or interest payments that were tax deductible as well. The IRS began to crack down on these strategies and attacked payments of salary or interest as unreasonable compensation or disguised dividends. Congress fought back by enacting penalties to patrol against excessive accumulations or avoidance of the individual progressive tax rates. It wasn’t hard for a corporation with good tax planning to justify the payment of reasonable compensation and accumulation of earnings on the basis of reasonable business judgment and thereby avoid constructive dividends and the corporate penalty tax.

Now, individuals and corporations are subject to the same top tax rate and dividends and long-term capital gains are both taxed at relatively low rates, the C corporation earnings accumulation strategy is much less compelling. The parity in the individual and corporate tax rates, in conjunction with the prospect of two levels of tax when a C corporation is sold, provides a greater incentive to use a pass-through entity instead of a C corporation, particularly if the business intends to distribute its earnings currently, does not have owners who work for the firm, or holds assets that are likely to appreciate in value over a relatively short time frame. It would not be beneficial to organize a venture that invests in passive assets such as real estate or financial assets to operate as a C corporation because the costs of doing so would be prohibitive in light of the double tax. In some cases, however, C corporations still offer tax savings, especially for businesses able to pay out most of their earnings as compensation to their high-income owners.

For a complete analysis of the tax implications of C Corporations, Partnerships, and S Corporations click here for the Joint Committee on Taxation’s publication entitled “Choice of Business Entity: Present Law and Data Relating to C Corporations, Partnerships, and S Corporations.”

McGrath and Spielberger, PLLC assists clients with all sorts of tax issues, both federal and state (including but not limited to North Carolina and South Carolina). Click here to contact us about your tax matter.

⬕

 McGrath & Spielberger, PLLC provides legal services in Florida, Georgia, North Carolina, Ohio, South Carolina, and Tennessee, as well as in some Federal courts. The Firm offers full scale representation, as well as limited scope services, as appropriate for the situation. Please be advised that the content on this website is not legal advice, but rather informational, and no attorney-client relationship is formed without the express agreement of this law firm. Thank you.

Posted in business law, Business Law & Contracts, business owners, income, Life and the Law, North Carolina, Tax Issues, tax rates

Jason McGrath Interviewed Regarding Internet Security for Law Firms andtheir Clients

Posted on March 15, 2015 by g83js92js91
Categories: charlotte business journal, cybercrime, Internet & Technology, Jason A McGrath, Jason McGrath News / Media, Life and the Law, The Legal Profession, virtual law

Law firms warned to be vigilant against cybercrime – The Charlotte Business Journal

Jan 30, 2015 – The N.C. State Bar released ethics opinions about cybersecurity, and … so they can be more efficient,” says Jason McGrath,  partner at McGrath & Spielberger . . . . (click link above for full story or read it below)

Law firms warned to be vigilant against cybercrime
LEGAL INC. SUBSCRIBER CONTENT: Jan 30, 2015, 6:00am EST
Bea Quirk, Contributing Writer

At the Mecklenburg County Bar’s recent monthly luncheon, the speaker, FBI Agent Colleen Moss, told attendees that although small and midsized law firms don’t regard themselves as targets for hackers, they are. As supervisor of the Charlotte Division’s Computer Intrusion Cyber Squad, she knows firsthand the firms’ vulnerability, no matter the size.

“Anytime there’s a large pot of money involved — escrow, a trust — you’re going to be a target,” Moss told the lawyers. “Criminals look for the fastest and quickest way to make the most money possible. If they find any other data that’s usable and sellable on the Internet, that’s fair game, too.”

Hackers aren’t always subtle in their attacks, as seen in a form of malware called ransomware that is gaining popularity. Hackers install a “cryptolock” on a company’s files and won’t provide access until a ransom is paid, says Clark Walton, an attorney at Alexander Ricks. He has a digital forensics consulting business and previously worked in cybersecurity at the Central Intelligence Agency.

Moss and Walton say regularly updating operating systems, firewalls and antivirus software is the best defense.

Email remains the entry point of choice for hackers. Moss says up to 85% of incidents stem from phishing emails — messages that look legitimate that ask the recipient to click on a link or open an attachment. That allows a hacker to install malware that infects the user’s computer — and an entire system.

“These criminals are good at socially engineering emails that look legitimate or are designed to pull at your heart strings,” Moss says.

One such effort surfaced last year, when hackers were found to have penetrated pharmaceutical companies and their outside advisers in banking and law. Emails were written in “flawless English” and tailored to recipients, who were duped into revealing information that allowed hackers to profit in stock trades, The New York Times reported.

Moss says information on a firm’s website and employee Facebook pages can be used to create credible email. Even though employees of law firms are generally aware of the danger, Moss says they still fall for scams offering financial rewards in exchange for providing access to a checking account.

But law firms have a difficult situation to balance. They are businesses and need to respond to emails. They can’t be ignored, even if they appear suspicious. Moss suggests employees contact their IT department, server host or a consultant. She also recommends reporting apparent scams to www.ic3.gov, an information clearinghouse for Internet crime.

If a law firm in North Carolina is hacked, the state’s Identity Theft Protection Act mandates that customers and clients be informed. Moss also hopes a firm will contact the FBI, which might be able to curb additional damage. Doing so also helps the agency track criminals and can increase the public’s awareness of current scams.

Both the state and national bars are aware of the growing problem. The N.C. State Bar released ethics opinions about cybersecurity, and the American Bar Association published a guide to security.

Moss says cybersecurity is often a matter of risk management. Law firms must consider the costs of security and their tolerance for risk. Small firms must do this kind of analysis as their work and communications are increasingly digitized.

“Smaller firms are moving more to technology so they can be more efficient,” says Jason McGrath, partner at McGrath & Spielberger and chair of the Bar committee that organized Moss’ presentation. “You have to invest in security once technology becomes your bread and butter. It’s just common sense.”

Posted in charlotte business journal, cybercrime, Internet & Technology, Jason A McGrath, Jason McGrath News / Media, Life and the Law, The Legal Profession, virtual law

Jason McGrath Quoted in Story About NASCAR Hall of Fame Loans

Posted on March 15, 2015May 2, 2022 by g83js92js91
Categories: Charlotte, charlotte city council, Collections, Credit, Debt, Jason A McGrath, Jason McGrath News / Media, Life and the Law, loan, NASCAR Hall of Fame
City Lab, a division of The Atlantic, Jan 12, 2015 – Yet, as highlighted by a recent Charlotte Observer editorial, the project’s … Jason McGrath, a Charlotte attorney experienced in real-estate … (full story linked and pasted below)

Investing in NASCAR: What Could Go Wrong?

SAM STURGIS  JAN 12, 2015

⬧

Charlotte’s NASCAR Hall of Fame crashed hard. As the city preps for an $18 million debt-forgiveness vote, homeowners wonder where their bailouts are.

NASCAR-Hall-1
A beautiful disaster. (Flickr/Daniel Lobo)

We just rang in 2015, but the city of Charlotte, North Carolina, would love to see the calendar flipped back to 2005.

That was the year NASCAR cemented its position as one of the United States’ most popular sports. Fortune magazine drooled over the racing juggernaut a decade ago, proudly declaring NASCAR “the fastest-growing, best-run sports business in America—with the emphasis on businesses.”

But the financial viability of NASCAR has crashed in recent years amid plummeting race attendance and growing disinterest in car racing among Americans. And nothing symbolizes the sport’s tragic decline more than its Hall of Fame, which broke ground with great expectations in 2007 and officially opened in 2010—and is now hemorrhaging money for the city of Charlotte.

Monday night, Charlotte’s city council is expected to pass a loan-forgiveness deal that will eliminate nearly $18 million in debt the city owes on the NASCAR Hall of Fame. Opening the glitzy development cost the city $200 million, but the project was viewed as a crucial job creator for downtown Charlotte, undergoing noticeable revival. Today, to call the NASCAR Hall of Fame a financial disaster would be an understatement.

NASCAR-Hall-2
The NASCAR Hall of Fame, under construction in 2007, features a 278-seat theater, meeting halls, and a cafe. (Flickr/James Willamor)

Early projections had the city-owned Hall of Fame pulling in revenues of up to $1 million annually. Instead, according to Sporting News, the venue has lost over $5 million since opening. Attendance is abysmal. Developers expected at least 400,000 visitors annually, with the potential to attract up to 800,000. Over the past five years, however, only about 170,000 NASCAR fans have visited the venue each year, or 470 per day. One official representing the NASCAR Hall of Fame acknowledges some financial projections have not been met, but insists, “the Hall is doing well.” Tom Murray, CEO of the Charlotte Regional Visitors Authority, which overseas large city-owned assets, says the NASCAR Hall of Fame will earn money or break even if the debt deal is agreed upon.

City officials are framing today’s debt deal as a “restructuring” rather than a bailout. Yet, as highlighted by a recent Charlotte Observer editorial, the project’s downfall can’t really be spun:

It doesn’t camouflage that the Hall of Fame couldn’t survive on its own. It doesn’t change the fact that the city, when it bid for the hall, miscalculated everything from attendance projections to the arc of NASCAR’s popularity.

The failure of the deal becomes even more clear as cities struggle to pull out of the Great Recession. Charlotte was spared the crippling housing crisis that hit cities like Detroit and Las Vegas. Still, North Carolina’s largest metro was hit hard, according to the Brookings Institution. Single-family properties financed with a mortgage lost 23 percent of their value during the recession and, despite a marginal recovery, are still nowhere near pre-recession rates.

NASCAR-Hall_housing-prices
(Brookings)

Jason McGrath, a Charlotte attorney experienced in real-estate litigation, says the community’s support for the debt-forgiveness deal is “mixed.” Given how badly the venue has underdelivered, taxpayers naturally balk at wiping its financial slate clean so easily. However, McGrath says, residents know they are likely to benefit, at least indirectly, if the city’s debt toward the project is written off. (McGrath chairs a civil service committee for the city, but spoke to CityLab from the perspective as an independent lawyer).

“Of course, the folks that are facing foreclosure and have not been able to get help are looking at this and likely thinking to themselves, ‘Well, here we go again,’ where it’s always the big fish that seem to get the big breaks,” McGrath says.

Nearly 16,000 foreclosed properties in Charlotte are either for sale or auction, according to RealyTrac, an online housing database. Would the $18 million being written off for the NASCAR Hall of Fame have better served residential properties currently underwater?

⬧
Posted in Charlotte, charlotte city council, Collections, Credit, Debt, Jason A McGrath, Jason McGrath News / Media, Life and the Law, loan, NASCAR Hall of Fame

Posts navigation

Older posts

Categories

Recent Posts

  • Business Ownership Deals (Part 6 of Series): How Many Different Attorneys Need To Be Involved?
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 5, Filings With The Secretary Of State
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 4, Operating Agreement (“OA”) Changes
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 3, The Company Resolution
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs (Part 2)

McGrath & Spielberger, PLLC

Tweets by JasonMcGrathLaw

Sitemap

  • Contact Us
  • Home
  • Who We Are
  • Where We Practice
  • Consultations
  • Blog

What We Do

  • Business & Contract Law
  • Limited Liability Company
  • Mortgage & Foreclosure
  • Real Estate Cases
  • Disputes & Lawsuits
  • Tax & IRS Matters
  • Wills, Trusts & Estate Planning
  • Prenuptial Agreements
  • Other Practice Areas
  • Business Compliance Services

Location

Directions

Contact Us

7300 Carmel Executive Park Drive, Suite 300, Charlotte, NC 28226

info@mcgrathspielberger.com

1.800.481.2180


fb


tw


yt


ld

google

The attorneys responsible for this website are Jason McGrath and Jim Spielberger. At least some of the content of this website may be considered attorney advertising in some jurisdictions. For information about our website privacy policy and terms and conditions, please click here.

Attorney Website Design, Legal Search Engine Optimizations and Lawyer Online Advertising by Leads Online Marketing Services.