Baker Tax Blog

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...

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...

Running your business as an S corporation has several tax benefits. However, it's hard to raise money in an S corp because you can only have one class of stock and you cannot have entity shareholders. So what do you do when you want traditional investors? One...

Few tax code sections are as technical or punitive as Section 409A. If you get things wrong, you’re staring a 20% penalty in the face… plus acceleration of tax, plus interest, plus an additional 5% penalty if you happen to live in California. But there is good news....

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...

“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...