by Mike Baker | Jul 4, 2024
I’ve always thought FF stock was pretty creative. And with the secondary purchase plus “magical” exchange structure losing favor, perhaps it’s time to give FF stock another look. What is FF stock? Founders start a company. They grow it successfully for several years...
by Mike Baker | May 12, 2024
Venture capital and private equity fund sponsors frequently ask “how much money do I actually have to contribute to a partnership as the general partner (or “GP”)?” Unfortunately, the answer is that old tax lawyer chestnut: “It’s not entirely clear, and largely...
by Mike Baker | Mar 29, 2024
Pretend you have a preferred equity investment in a company, entitling you to a 2x return before common holders participate in deal or liquidation proceeds. A buyout term sheet arrives, and while the valuation would only get you a 1.8x return, that’s more than enough,...
by Mike Baker | Mar 23, 2024
The Active Business Test Here’s a summary of how the qualified small business stock (QSBS) rules limit the types and amounts of passive assets a corporation can hold while maintaining QSBS eligibility. 1. General Rule The Active Business Test restricts how much of the...
by Mike Baker | Feb 1, 2024
Updated August 20, 2024 Certain recent changes to tax code Section 174 may negatively affect companies that have research and development (R&D) expenses. Here’s the basic problem: If in 2023 you spent $1M to make $1.2M then you have $200K of profit. If we lived...
