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...
by Mike Baker | Jan 12, 2024
Let’s say you have some intellectual property (IP) that you’d like to give to a corporation in exchange for shares of its common stock. The IP and stock are both worth $10,000 and you have tax basis in the IP of $800. Normally such an exchange would...
