If a Worker is a Partner, Can That Worker Also Be Considered an Employee?

In Northern California, and especially in Silicon Valley, it has become more and more common for a startup business to be organized as a Limited Liability Corporation. The LLC format provides simplicity and flow-through tax treatment, as well as fairly easy future conversion to a corporate form. Such companies are normally cash poor but have a pristine capital structure, permitting them to offer ownership rights to their workers. But if a worker is a partner, can that worker also be considered an employee for tax purposes?

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Registration to do Business in Delaware Does Not Create General Jurisdiction Over Non-Delaware Corporation

If a corporation qualifies to do business in a state, that corporation is “in” that state, right? It has to send in annual registration fees, appoint an agent for service of process, and file tax returns. Hasn’t the corporation consented to general jurisdiction by reason of its registration?

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Can a Non-Binding Term Sheet Ever Support a Claim for Expectation Damages? 

The Delaware Supreme Court, in SIGA Technologies Inc. v. PharmAthene, Inc., Case No. D67068 (Del. Dec. 23 2015), recently reconsidered whether a term sheet labeled as “non-binding” could support a party’s damage claims where his counter-party failed to negotiate in good faith. The Court held that it could, and awarded damages of more than $100,000,000 to the aggrieved party.

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Did Your Client Miss the 30-Day Deadline for Filing a Section 83(b) Election?  Here’s a Partial Fix for the Tax Problem

A recurring issue for many business lawyers involves an employee who receives stock subject to vesting conditions. The normal approach is to have the employee file a “Section 83(b) election” with the IRS within 30 days of receiving the stock. The Section 83(b) election is an election to recognize any income associated with the stock grant immediately upon receipt of the stock. If the employee does not file the Section 83(b) election within 30 days of the grant date, the employee is generally forced to recognize the stock value as income as he or she satisfies the vesting conditions – which will often happen at a time when the stock has appreciated and the amount of taxable income has correspondingly increased.

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