As you may have heard, CVS pharmacies are planning to stop selling tobacco products. When I heard about that, the lawyer side of my brain wondered about the thought process behind the decision. As the company, CVS Caremark, is a publicly traded for profit corporation, and not a benefit corporation, how would the CVS board justify its decision? Continue reading
If you export products for sale of any type and don’t know what an IC-DISC (or simply a DISC) is, or think it’s a round piece of plastic you put in your computer’s drive, then keep reading. Any United States business with qualifying export sales can save a large amount of money with the use of a Interest Charge Domestic International Sales Corporation (referred to hereinafter as a “DISC”). Continue reading
There’s been a lot of discussion about whether online or virtual accounts can be deemed securities under the U.S. federal securities law. The most well known at the moment is Bitcoin.
A case was just decided where the court found that Bitcoin was a currency. Based on that fact, and that the protaganist in the case was offering a money making scheme (you put in money, wait and make more money off Bitcoin), the scheme was subject to the securities laws. We’ll have to parse out the holding. The court did not hold that the Bitcoin itself is a security, but rather that Bitcoins are a type of currency – because they can be converted into currency (which I’m not sure I agree with – any commodity, product or item can somehow be converted to currency - and the distinction between selling and converting seems like a big deal). Here’s the link to the case, its actually rather short and sparse on legal analysis for one that makes such huge leaps in legal doctrine as applied to a concept which the court is probably not overly familiar with. The old adage that bad facts make bad law seems to be the culprit again, as the scheme the guy in Texas was attempting to pull off was not something a judge would let him off on.
I’m pretty sure this isn’t the last we’ve heard of the SEC v. Bitcoin debate. Mark it up as SEC 1, Bitcoin 0 so far, unfortunately.
I’ll give a breakdown of the securities laws and how they could be, and have been, applied to virtual goods, online items, and currency, including Bitcoin (which I’m not conceding is technically a currency). Continue reading
Yesterday the SEC released its long awaited crowdfunding rules. The Proposed Rules are available here (and SEC’s press release here), and at 585 pages will make labored reading. I’ve seen plenty of press coverage on the topic and most stories have taken the premise that equity crowdfunding (which the SEC is calling “Regulation Crowdfunding”) is something that the SEC is “considering” allowing. I want to dispel that notion, and as I’ve discussed before (and here), the JOBS Act passed by Congress directs the SEC to promulgate regulations to allow equity crowdfunding. The SEC has no choice in the matter, although it did take its time (these proposed rules were supposed to be issued by the end of last year – 2012). And unfortunately the SEC can make compliance with the Regulation Crowdfunding rules so difficult that very few issuers will choose to use them to raise capital. Continue reading
Shareholders who are employed by a corporation which has elected to be taxed as an S-Corp wear two hats. They are investors in the entity (they contributed capital to get their shares initially) and allowed to get a return on their capital, and they are employees who receive wages. When an owner/employee of an S-Corp (or an LLC which is taxed as an S-Corp) is on a salary from the S-Corp, the wages payable are subject to employment taxes, and distributions made to the owner of the S-Corp are not subject to employment taxes. Also if the S-Corp was loaned money by the shareholder, the S-Corp can make payments to repay the loan to the shareholder, and these payments will not be subject to the employment tax. Misclassifying payments as distributions or loan repayments, when they really should be wages can lead to an audit from the IRS.