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Considering Converting an LLC into a Corporation? Here Are the QSBS Issues You Should Be Thinking About.
Articles, Form a Company Guest User Articles, Form a Company Guest User

Considering Converting an LLC into a Corporation? Here Are the QSBS Issues You Should Be Thinking About.

A common question we receive from founders is whether to organize their start-up business as a corporation or as an LLC . While there are many non-tax related factors that need to be considered, this is often (at least in part) a tax driven decision. Organizing the business as an LLC can come with certain tax advantages, such as avoiding an entity level corporate tax and, subject to various limitations, permitting founders to use losses generated by the business and passed through on their Schedule K-1 to offset their other income. Alternatively, while organizing the business as a corporation results in an entity level corporate tax and precludes the pass-through of losses, it may permit the founders to access the “qualified small business stock” (QSBS) rules of Section 1202 of the Code.

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IRS Issues Notice 2023-44 Clarifying the 48C Program Application Process and Timeline
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IRS Issues Notice 2023-44 Clarifying the 48C Program Application Process and Timeline

On May 31, 2023, the Department of Treasury and the Internal Revenue Service released Notice 2023-44 to provide additional guidance on Section 48C, a revised and expanded allocation-based investment tax credit for qualified investments in eligible qualifying advanced energy projects. The Notice modifies and clarifies Notice 2023-18, which was released on February 13, 2023 and provided detailed mechanical guidance on applying for allocations of the Section 48C Credit

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Benefits and Legal Risks of Embracing Generative AI Applications
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Benefits and Legal Risks of Embracing Generative AI Applications

One of the industries that can be transformed by generative AI is the legal industry. The revolutionary tools powered by generative AI raise many questions: will the legal industry prohibit or embrace this technology? If it embraces the technology, what will adaptation look like in practice? And, it even poses an existential question – does it have the potential of making lawyers obsolete?

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Board Warns Employers to Pare Back Overbroad Non-Disparagement and Confidentiality Provisions in Severance Agreements
Articles, Build Your Team Guest Contributor Articles, Build Your Team Guest Contributor

Board Warns Employers to Pare Back Overbroad Non-Disparagement and Confidentiality Provisions in Severance Agreements

Severance agreements offered to non-supervisory employees that include broad-based non-disparagement and confidentiality provisions are unlawful according to the National Labor Relations Board. The Board’s decision in McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), reverses Trump administration era Board decisions on this issue, and if upheld, may have far reaching consequences for both unionized and non-unionized workplaces.

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New York State Offers Matching Investment Funds for Qualified Early Stage Start-Ups
Articles, Raise Capital Sam Effron Articles, Raise Capital Sam Effron

New York State Offers Matching Investment Funds for Qualified Early Stage Start-Ups

New York Governor Kathy Hochul recently announced the establishment of a new initiative to match up to $30 million in funding received by early stage companies operating in New York. Through the Pre-Seed and Seed Matching Fund Program, start-ups could receive $50,000 to $250,000 to match investments in the form of convertible debt, a Simple Agreement for Future Equity (SAFE), or equity securities.

In this alert, we provide an overview of the program and its eligibility requirements.

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Extending for Success: The Rising Trend of Extension Rounds and the Importance of Due Diligence
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Extending for Success: The Rising Trend of Extension Rounds and the Importance of Due Diligence

In light of a slowing market, companies that have already secured venture capital funding are increasingly resorting to extension rounds as a means of obtaining additional capital in an attempt to avoid a down round financing and extend their runway until the fundraising environment improves. Extension rounds can provide several strategic benefits for startups.

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Do You Have The Rights? How to Maintain Investor Confidence When Using Third-Party Intellectual Property
Articles, Grow Your Company Bertie Magit Articles, Grow Your Company Bertie Magit

Do You Have The Rights? How to Maintain Investor Confidence When Using Third-Party Intellectual Property

Imagine the following scenario: You, as the founder of a business, have spent the past three years building your company. You have been bootstrapping until now, but the company is at a crossroads and in order to grow the company to its full potential, you have decided to turn to venture capital to attract additional funding. Because yours is a younger company, and therefore a riskier investment, your potential investors have decided to conduct thorough due diligence to allay some of their concerns. You suddenly think about the third parties whose intellectual property your company uses in its regular operation – you paid for access to that intellectual property so you are free to use it however and whenever you want, right?

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“Ding Dong” -- FTC-Drizly Data Breach Settlement Will follow CEO Personally for a Decade
Articles, Protect Your Idea and Data Cynthia Larose Articles, Protect Your Idea and Data Cynthia Larose

“Ding Dong” -- FTC-Drizly Data Breach Settlement Will follow CEO Personally for a Decade

The Federal Trade Commission (“FTC”) announced on Monday that it is settling a case against Drizly and its CEO stemming from a 2020 data breach that impacted roughly 2.5 million consumers. The proposed order not only contains a laundry list of security-related obligations for Drizly that span twenty years, but also names and targets its CEO James Cory Rellas personally, hitting him with obligations that will follow him for a decade, even if he moves to other organizations. There are also hints that the FTC intends to elevate information security issues to boards of directors and other top-level executives.

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FINCEN Publishes Final Rule on Beneficial Ownership Requirements - A Critical Step Towards Heightened Transparency in U.S. Financial System
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FINCEN Publishes Final Rule on Beneficial Ownership Requirements - A Critical Step Towards Heightened Transparency in U.S. Financial System

FinCEN began the slow, arduous process towards a final set of regulations in April of 2021. Now, nearly eighteen months later FinCEN has published the first of three expected final rules. The first rule, published on September 30, 2022, deals with beneficial ownership reporting requirements and provides clarity regarding which entities must report BOI and what constitutes beneficial ownership (the “Final Rule”). While the full version of the Final Rule can be found on FederalRegister.gov, we further discuss these points and some additional components below.

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California Assembly Passes Sweeping Age-Appropriate Privacy Legislation
Articles, Protect Your Idea and Data Guest Contributor Articles, Protect Your Idea and Data Guest Contributor

California Assembly Passes Sweeping Age-Appropriate Privacy Legislation

California is leading the way on privacy regulation --- again. The California State Assembly has passed AB 2273, which, if approved by the California Governor, would require businesses that provide online services, products, or features likely to be accessed by children or teens under the age of 18 to increase their privacy and safety protections.

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Amendment to Delaware Law Permits Exculpation of Officers in Corporate Charters
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Amendment to Delaware Law Permits Exculpation of Officers in Corporate Charters

Delaware has long permitted corporations to limit or eliminate monetary liability of directors from breach of fiduciary duty of care lawsuits. However, the same protections have not been afforded to a corporation’s officers. Effective August 1, 2022, the Delaware General Corporation Law has been amended to address this discrepancy.

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