Baker Tax Blog

So, your company is being sold and you want to know whether you should exercise your stock options prior to closing.  First you should confirm whether the transaction agreement (i.e., stock purchase agreement, asset purchase agreement, or merger agreement) provides...

For tax purposes, there are three types of equity that can be issued in a partnership or an LLC taxed as a partnership: capital interests, profits interests, and carried interests. Knowing what type of interest you own or are being granted is important, because there...

 So, you started a business and you issued a convertible note. You know, a loan that can be repaid with the equity of your start-up. The date of the note conversion has arrived and you’re busy calculating how many shares you need to issue when suddenly you get an...

What do you do, when you receive a 409A valuation for your company that is lower than the exercise price of previously granted stock options? A few years ago I read an article titled, We Spend Too Much Time Celebrating "Start Ups" and Not Enough Time Celebrating "Keep...

So, you’d like to convert your limited liability company, which is taxed as a partnership, into a C corporation? This is generally not hard to do from a pure mechanics perspective.  If your LLC is organized in Delaware, or certain other states, the conversion can be...

Every year I get a new hard copy set of income tax regulations. These come in four phone book-size volumes. I probably look forward to getting these more than I should—they come at the end of December, and for a tax guy like me it always feels like a belated Christmas...

Someone just emailed me the following question (paraphrased): "I have a private company client who has approved a new hire grant to their new CEO that includes early exercise. The total exercise price of the option grant is $180,000 and the CEO is planning to exercise...

Let me start with the bad news: I have been persuaded that future token contracts likely do not work. But let's back up. If your offshore entity[1] has not yet minted tokens but you want to get something into the hands of service providers, historically you have had...

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...

 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...