Baker Tax Blog

You run a start-up and want to grant stock options. You keep hearing that there are two types, and you want to understand the differences between the two. You’ve come to the right place. The two types of stock options are incentive stock options, commonly referred to...

Those who hold qualified small business stock (QSBS) have dreams at night about selling their shares and receiving the proceeds tax free.[1] Lately, however, I’ve seen a number of stockholders wake up from that dream in a cold sweat. Why? The company is being sold and...

So, you own equity in an LLC taxed as a partnership, and it has come time to sell the company. What happens if you sell your interest? What happens if instead the LLC sells its assets? Similarities Regardless of whether the transaction is structured as an equity sale...

 Section 409A is a highly technical section of the tax code that slaps a 20% tax penalty onto improperly structured deferred compensation. But there is a hack. You can avoid the penalty by adding these 10 magic words to the contract… “, subject to [his/her] continuous...

On March 27, 2020, President Trump signed the third – and most comprehensive – coronavirus relief package into law. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed by both the House of Representatives and the Senate with broad...

So, you accidentally granted one or more discount stock options. Now what? As quick background, a discount stock option has an exercise price below the fair market value of the underlying stock on the date of grant.[1] For whatever reason, Congress doesn’t like this...

You have an employee who is leaving. She tells you she doesn’t have the cash to exercise her Company stock option in the first three months post-termination and she realizes if she doesn’t the option will expire. She pleads with you to do something and you are willing...

You can tell the difference between equity and non-equity partners at Kirkland & Ellis by looking to see if they have “P.C.” after their name. It’s true. See here for an example of an equity partner and here for an example of a non-equity partner. Still skeptical?...

Let me explain why buying stock with a note can be so amazing. Imagine your employer offers you two alternatives: one million dollars worth of stock, or a stock option giving you the right to buy stock currently worth one million dollars. The stock option right lasts...

On October 23, 2019, the IRS released guidance with respect to the tax treatment of family members that work together in a family business. De Facto Partnership I expect it’s fairly common for a couple to treat a family business, where no entity has been formed, as a...

Mike Baker frequently advises with respect to earnouts. He possesses a breadth and depth of experience in tax and employee benefits & compensation law that spans multiple decades. For additional information, please contact mike@mbakertaxlaw.com.

I can tell you how to make money and pay no tax. “Doubtful,” you think, feeling skeptical and remembering that wise mantra “if it sounds too good to be true, it probably is.” True story: last week I was eating at a Chinese restaurant, opened up my fortune cookie, and...