Baker Tax Blog

It’s a badge of honor for a founder to be able to say, “we started this company in my garage.” After all, notable companies like Apple started that way. On the other hand, founders do not enjoy living in their parent’s garage. When the typical lifecycle from formation...

So, you want to grant a stock option in a privately-held corporation? Here’s how, in 10 easy steps… Step 1: Have legal counsel prepare an equity incentive plan, form of option grant notice, option agreement, notice of exercise, and board and stockholder consent. These...

The other day I received this email from a corporate attorney: “I just got docs for these guys. They are an LLC that elected to be treated as an S-Corp. Why in the world would anyone do that? Ah yes, why would anyone do that? The story goes like this: A company starts...

Any time someone calls me and asks about “warrants” I immediately ask, are you talking about a “compensatory warrant” or a “non-compensatory warrant”? The person on the other end of the phone isn’t always sure. This stems in part from the fact that the paperwork to...

QSBS is the one of the biggest loopholes in the tax law. What is QSBS? If you invest in a qualified small business after September 27, 2010, and hold your stock for more than five years, when you sell your stock you will have no federal tax on the first $10,000,000 of...

“Our Company would like to issue stock options to a resident of Country X. Anything special we should consider?” Start-ups are notoriously short on cash. And many use service providers in other countries. Put those two things together, and stock options for everyone...

Sometimes a founder wants to lure a new executive to the company (or incentivize a current executive) with a meaningful stock grant, but there’s no room left in the company’s equity plan pool and the other shareholders aren’t excited about the potential dilution. So,...

Have you ever wanted to be able to talk like a tax lawyer? Come on, not even a little bit? Below are ten tax code sections which govern entities taxed as partnerships distilled into their most basic concepts. For illustrative purposes throughout, let’s pretend you...

Occasionally, I am asked if a company can consider employee services as payment for stock. The thought process goes like this: On a date when ABC Inc. stock is worth $1 per share the company grants a share to each of Employee A and Employee B. The shares are either...

You founded a company and the time has finally come to sell. For years you’ve dreamt of the day when you can turn your illiquid stock into cold hard cash and buy a house on the beach and retire. Hang on tight, that day might not be here yet. It’s very common for a...