The 83(b) election is one of the most consequential decisions most startup founders ever face—yet it’s designed to punish oversight. It’s time to modernize the rule: make the election automatic unless you opt out.
By Joe Wallin, Seattle Startup Lawyer Equity compensation is one of the defining features of the startup world. It aligns incentives, attracts talent that’s willing to bet on the company’s future, and preserves precious cash. But it also introduces complexity—especially when it comes to valuation, taxation, and
The Section 83(b) election is a provision in the U.S. tax code that allows recipients of restricted stock to accelerate the recognition of ordinary income to the date of grant rather than when the stock vests. When you file an 83(b) election, you choose to pay income
Choosing the wrong entity structure can cost startup founders millions. Only C-corporations can issue Qualified Small Business Stock (QSBS) under Section 1202. Here’s why that matters — and how to preserve your shot at the $15 million tax exclusion.
Section 1202 and the Excluded Business Categories Section 1202 of the Internal Revenue Code allows founders and investors to exclude significant gains from the sale of qualified small business stock (QSBS). To qualify, the issuing corporation must meet an active business requirement and cannot be primarily engaged in certain excluded
ACA Webinar – QSBS, R&D, and Carried Interest Updates Post–H.R. 1 Why this webinar matters On July 4, 2025, President Trump signed the “One Big Beautiful Bill” Act (H.R. 1) into law following razor‑thin votes in both chambers of Congress. Although the legislation is sweeping
Disclaimer: This post is for informational purposes only and does not constitute legal or tax advice. Always consult a qualified advisor about your specific situation. Background – What Is QSBS? Qualified Small Business Stock (QSBS) refers to stock issued by a U.S. C‑corporation with gross assets not exceeding a
Washington’s EPOA requires employers to include pay ranges and benefits in job postings. Failure to comply may cost up to $5,000 per applicant, though a new law allows a five-day cure period after notice.
Qualified small business stock (QSBS) issued by a C‑corporation can provide founders and investors with powerful tax advantages under IRC §1202. However, not every exit fits neatly within the five‑year holding period required for a full 1202 exclusion, and sales that push investors above the per‑issuer cap
Early‑stage founders and investors need to stay on top of evolving tax and corporate regulations. Recent changes in federal and state law have reshaped key planning strategies around qualified small business stock (QSBS), Section 83(b) elections, and beneficial ownership reporting. Here are three of the most consequential updates
What Is Qualified Small Business Stock (QSBS)? Qualified Small Business Stock, or QSBS, refers to shares issued by a U.S. C corporation that meet the requirements of Section 1202 of the Internal Revenue Code. Under these rules, founders, investors, contractors and employees who receive stock directly from the company
The Internal Revenue Service (IRS) has quietly modernized the once antiquated process for making a Section 83(b) election. Many founders, employees and other service providers use a Section 83(b) election to recognize income on equity at the time of grant so that future appreciation may be taxed at
Legal Updates
On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (often called the "Big Beautiful Bill"). Among its many provisions, the Act makes sweeping changes to Section 1202 of the Internal Revenue Code, which governs Qualified Small Business Stock (QSBS) and has
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Update (Aug 27, 2025): FinCEN’s March 21, 2025 interim rule eliminated the BOI reporting requirement for domestic companies and U.S. residents and set an April 25, 2025 deadline for foreign reporting companies. The drama described below is now resolved. From FinCEN: "Immediate Release February 27, 2025 WASHINGTON–
Startup
By Amy Weston Washington State is on track to pass a far-reaching new piece of legislation in the upcoming weeks. The “My Health My Data” Act (House Bill 1155), if signed into law, will take effect starting on March 31, 2024. The title of the law implies that it will
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By Lucinda Luke March 2023 A new case recently decided by the National Labor Relations Board held that “an employer violates Section 8(a)(1) of the [National Labor Relations] Act when it proffers a severance agreement with provisions that would restrict employees’ exercise of their NLRA rights.” McLaren Macomb,
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by Lucinda J. Luke 12/28/22 Amendments to Washington's Equal Pay and Opportunity Act (EPOA) go into effect January 1, 2023 (with no grace period) and require most employers who engage in business in Washington state to include pay ranges and benefits information in their job postings.
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Authored by: Joshua D. Brittingham March 2023 Severance agreements have traditionally included confidentiality clauses that allow employers to keep the terms of the agreement, including the amount paid, confidential. This is particularly true when an employee has asserted claims that are waived as part of the severance agreement. However, recent
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Authored by: Lauren Fricke In 2021, the Washington State legislature enacted a new tax on the sale of long-term capital assets. In March 2022, the Douglas County Superior Court ruled the new tax is invalid because it violates the state constitution. That decision has been appealed to the Washington State
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Welcome back to the Carney Law Privacy team’s blog on all things privacy-related. This post follows up on the steps needed to update Standard Contractual Clauses. As you have likely heard, in response to the Schrems II decision invalidating the Privacy Shield and to reflect Europe’s General Data
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Welcome back to Shhhh…(a Privacy Blog). Lots have happened in the privacy world in the past few months, and we thought we’d catch our readers up on the biggest headlines. Updated Standard Contractual Clauses The first part of Step 2 involves taking the country list from Step 1
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Readers of our first post, GDPR update in this series, have already worked through Step 1: Transfer Mapping. Part of that step was determining what countries you’re exporting data to. Now, we move onto step 2: Transfer Tools. Truth be told, Step 2 is really two parts. So, go
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Last week the European Commission announced that the Standard Contractual Clauses (the “SCCs”) are being updated. These changes primarily apply to entities exporting data out of the European Economic Area. Starting in 2021, whether you’re a controller or a processor (or both!), you’ll need to make certain your
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You have an idea for a new startup. One of your first google searches will probably be about how/where to incorporate your business. There’s some good advice out there and some bad advice out there. In the interest of cutting through the noise, here’s the advice we