An asset sale is a common method for transferring business ownership. It involves the business entity selling its assets to a new entity organized by the buyer rather than the business owner selling his or her ownership of business entity (its stock if organized as a corporation or its membership interests if organized as a… Read more »
SAFEs, or Simple Agreements for Future Equity, are investment instruments sold by startups in early-stage fund raising. While related to equity, they are not considered traditional equity instruments at the time of their sale or issuance. Instead, a SAFE is a contract that gives the investor the right to convert the amount invested (the “Purchase… Read more »
Investors in startups frequently require the corporation to warrant in connection with the sale of its stock that the startup’s shares are qualified small business stock (QSBS) within the meaning of Section 1202 of the Internal Revenue Code (the Code). Section 1202 allows certain taxpayers to exclude from taxation up to 100% of gain realized… Read more »
A stock repurchase right with regard to a founder is a provision in the founder’s stock purchase agreement permitting the issuing corporation (or its assignee) to repurchase certain of the founder’s shares should they leave the corporation before an agreed minimum period of time has elapsed. Venture capital investors often require that the corporation have… Read more »
There are two major differences between incentive stock options (ISOs) and non-qualified stock options (NSOs): the type of person who may receive the option award and the tax consequences at the time of its exercise (buying the stock). There are other technical distinctions: ISOs come with a set of limiting requirements, whereas NSOs (like restricted… Read more »
March 2024 Author: Andrew (Drew) Piunti DPA Law PC drew@dpalawyers.com An “F” reorganization is a type of qualifying tax-free reorganization for corporations under Section 368(a)(1)(F) of the Internal Revenue Code (the “Code”) that changes a corporation’s “identity, form, or place of organization” of a corporation. To satisfy its tax-free requirements, the transaction must meet one… Read more »
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