Saturday, March 28, 2020

When the “Vikings” Sacked Paris

When the “Vikings” Sacked Paris

      Today is the anniversary of the sack of Paris in the year 845 by the Norsemen (Vikings).  By tradition the Norsemen (Vikings is not a people, it’s a job description, think raider) were led by the legendary Ragnar Lodbrok.  Which is likely just a tradition; the scholarship generally concludes that he never existed and is a composite of several individuals. But it was a great launch for the series Vikings.

      Regardless of whether Ragnar Lodbrok did live as a historical person, Rollo was not his brother.  Rollo died somewhere in the period 928-930, and is estimated to have been born circa 860. 

Certain Filing Deadlines with Louisville Metro Revenue Commission Delayed

Certain Filing Deadlines with Louisville Metro Revenue Commission Delayed

      As previously reviewed (HERE IS A LINK to that posting), in Notice 2020–18, the Internal Revenue Service extended a number of tax deadlines, including the due date for 2019 tax returns and certain 2019 and 2020 tax payments, to July 15, 2020.Following that lead, the Louisville Metro Revenue Commission (“LMRC”) is extending the due dates for 2019 LMRC Occupational License Tax Return (Form OL-3) or Extension Request (Form OL-3E) to July 15, 2020. Absent this extension the due date would have been April 15, 2020. This deferral of the due date applies to all companies having a fiscal year end of December 31, 2019 through February 29, 2020. 

      In addition, the LMRC quarterly deposit deadline of April 15, 2020 has been shifted one month to May 15, 2020. 

      The website of the LMRC has additional information. HERE IS A LINK to that website.

Tuesday, March 24, 2020

Deadline Delayed for Federal Tax Returns and Payments - Stoll Keenon Ogden PLLC

IRS Postpones April 15 Payment and Filing Due Date Because of COVID-19 Emergency
March 23, 2020
Last week, in a pair of announcements issued on Wednesday and Friday, the U.S. Treasury provided relief from federal income tax filing and payment deadlines to U.S. taxpayers who have been adversely affected by the COVID-19 emergency and have a federal income tax payment or federal income tax return due on April 15, 2020. See IRS Notices 2020-17 and 2020-18. These Notices postpone to July 15, 2020 the obligation to file income tax returns and pay income taxes (including estimated income taxes) otherwise due April 15, 2020. No interest, penalty, or addition to tax for failure to file a federal income tax return or to pay federal income taxes will accrue between April 15, 2020 and July 15, 2020, for any return postponed by the Notices. While these Notices address both business and personal returns, this discussion is focused upon personal returns.
2019 Income Tax Returns
Notice 2020-18 postpones the due date for 2019 individual income tax returns to July 15, 2020 (rather than April 15 as is the case in “normal” years). There is no need to file a request for an extension in order to enjoy the benefit of the postponement – it is automatic.
That said, you may file your 2019 individual income tax return at any time and you should consider filing it early if you are expecting a refund.
Final 2019 Income Tax Payments
Individuals with unpaid income tax normally pay the amount of tax due as shown on their return when filed on April 15. Individuals requesting the automatic 6-month extension of time to file their individual income tax return would make an estimated payment with the application for the extension. Taxpayers under or overestimating the tax liability would make a final payment with or request a refund on their income tax return when filed by the extended due date.
The due date to make either a final or an estimated income payment for 2019 individual income taxes is postponed from April 15 to July 15, 2020. If you request an automatic extension to file your 2019 tax return to after July 15 (IRS Form 4868), you must make an estimated payment of your remaining 2019 income tax with that filing, just as you would were your return due on April 15.
The April 15 deadline for making contributions to IRAs and health savings accounts for 2019 has been changed to July 15th as well.
Estimated Payments on 2020 Income Taxes
Persons who are self-employed, rather than having taxes withheld from paychecks and remitted to the IRS by the employer, make quarterly estimated payments of the income tax due with a reconciliation on the final income tax return for the year. Those estimated tax due dates are April 15, June 15, September 15 and January 15 of the subsequent year.
Notice 2020-18 postpones the due date for the April 15 estimated payment of 2020 taxes to July 15. The postponement applies only the estimated tax payment otherwise due on April 15. As yet, no relief has been granted the estimated tax payment due June 15. Absent further relief self-employed taxpayers must pay estimated income tax on June 15 for the period April 15 – June 15 (2 months) and an additional payment on July 15 for the period January 1 – April 15. (Note that in addition to this administrative relief for taxpayers, Congress currently is considering legislation that would further delay the due date for the payment of estimated income taxes in 2020.)
S-Corporations, C-Corporations and Partnerships
The postponement of tax return filing date and tax payment dates applies only to “persons” with a federal income tax payment or a federal income tax return due April 15, 2020. The term “person” includes not only individuals but also partnerships, corporations and other taxpayers such as trusts and estates. The relief afforded by Notices 2020-17 and 2020-18 likely will have little impact on S-Corporations as most are calendar year taxpayers and the 2019 tax return for such taxpayers was due on March 16. Partnerships (most LLCs with two or more members are taxed as partnerships) do not file a tax return, but rather an “information return” (Form 1065). Notice 2020-18 is express that it does not extend the due date for information returns. Assuming the partnership uses a December 31 year end, that due date, for the 2019 tax year, was March 15, 2020. The Form 1065 for partnerships using a fiscal year is due the 15th day of the third month after the year end. Partnerships that anticipate a problem in satisfying that deadline should file a request for an automatic extension (IRS Form 7004).
State Tax Filing and Payment Deadlines
These IRS Notices apply only to federal income tax return and payment due dates; they do not alter your state tax return and payment liabilities. Many states have or are planning to follow suit. The Indiana Department issued a Press Release announcing it will conform to the federal tax filing and payment postponements. The Kentucky Department of Revenue announced it will adopt “most” of the income tax relief described in the Notices, with formal guidance to follow. The American Institute of Certified Public Accountants is tracking state tax developments relating to the COVID-19 outbreak on its website. See AICPA

So Ends Gloriana

So Ends Gloriana

      Today marks the anniversary of the death, in 1603, of Queen Elizabeth I of England.  The last of the Tudor monarchs, it was under them, and particularly under Elizabeth, that England moved from being a relative backwater to a European power.  Not bad for a family whose claim upon the throne was at best tenuous; the great Tudor historian G.R. Elton described that Tudors as being “a political solution to a dynastic problem.”
      Elizabeth was succeeded by James I (being already James VI of Scotland), the great-grandson of her aunt Elizabeth Tudor who had in turn married James IV of Scotland.

Saturday, March 21, 2020

Failed S-Corporation Election by LLC with Partnership Tax Provisions in its Operating Agreement

Failed S-Corporation Election by LLC with Partnership Tax Provisions
in its Operating Agreement

      A recent Internal Revenue Service Private Letter Ruling (“PLR”) considered the circumstance of a limited liability company that filed an election to be classified as an S corporation. As the LLC’s operating agreement contained numerous provisions driven by partnership taxation, provisions that are inconsistent with classification as an S-Corporation, the Service held the election to be invalid. It did, however, confirm the election for the period after the operating agreement was revised. Private Letter Ruling 202010001, released March 6, 2020, dated November 29, 2019.

      First, a bit of background. It is almost axiomatic that LLCs will, for purposes of at least federal income taxation, be classified as partnerships. Assuming the LLC has two or more members, that is the default rule. However, it is subject to modification. An LLC that is otherwise taxed as a partnership may elect to be classified as a corporation, in which instance it will be subject to Subchapter C of the Internal Revenue Code. Then, assuming its various requirements are satisfied, the LLC, now taxed as a corporation, may elect into Subchapter S of the Internal Revenue Code, with the intention of thereafter being classified as an S-Corporation.

      In this instance, the LLC’s operating agreement, as initially adopted, provided for “Capital Accounts” and that certain allocations and distributions be made in accordance therewith. One requirement of being an S-Corporation is that there be only a “single class of stock” to the effect that every shareholder, in proportion to their share ownership, will share equally in both the allocation of tax items and both interim and liquidating distributions. Under the operating agreement as originally drafted, that requirement was not satisfied. 

      In addition, shares in the LLC were issued to an Individual Retirement Account (“IRA”). An IRA is not, however, a permitted shareholder in an S-Corporation. At some point in time, those shares were reacquired from the IRA, thereby terminating its status as a shareholder.

      Ultimately a new operating agreement was approved and submitted to the IRS. While the PLR does not recite the language in that amended agreement, it seems fair to assume that it eliminated the concept of a “Capital Account” and provided for strict pro-rata allocations and distributions amongst the “shares.”

      After reciting the applicable law, both statutory and regulatory, dealing with a valid S-Corporation election and the mechanism by which inadvertent failures to satisfy the requirements may be resolved, in this PRL, the IRS held: 

·                   as of the time of formation, the company had more than one class of stock;
·                even had the single class of stock rule not been violated at the initial operating agreement, from the time the IRA was a shareholder, any election would have terminated;
·                  the creation of the second class of stock under the original operating agreement was inadvertent; and
·              had there been a valid S-Corporation election in place at the time the IRA was issued shares, any termination of S-Corporation status consequent thereto would have been inadvertent.
      In consequence, from the date that the shares will be repurchased from the IRA, that date being subsequent to the approval of the new operating agreement that is consistent with the S-Corporation rules, the LLC will be treated as an S-Corporation. For the prior periods, it will be subject to Subchapter C of the Internal Revenue Code.

      The fact situation set forth in this PRL is all too common, and I on numerous opportunities gotten to address the same circumstance. Again, most LLCs contemplate being taxed under Subchapter K, it governing partnership taxation. For that reason, there will be significant discussion of taxation in the operating agreement. An election to be classified as an S-Corporation may still be appropriate for the LLC, but not until a new operating agreement, one drafted to conform to the S-Corporation rules, is put in place. The drafting of an operating agreement that is consistent with the S-Corporation rules is not a simple task; it requires affirmative overwriting of provisions of the Kentucky LLC Act. Put another way, the Kentucky LLC Act is not consistent with S-Corporation tax status unless there is a specialized operating agreement put in place that expressly overrides the conflicting provisions of the LLC Act.

Friday, March 20, 2020

Due Date for Tax Returns Deferred Until July 15

Due Date for Tax Returns Deferred Until July 15

According to numerous published reports, based upon a statement from Treasury Secretary Mnuchin, the due date for 2019 tax returns is being deferred until July 15, 2020.  HEREIS A LINK to one of those stories.

Thursday, March 19, 2020



HERE IS A LINK to our review of the new law.

Relief as to Tax Payment Dates But Not Filing Deadline

IRS Provides Relief as To April 15 Tax Payment Dates;
No Relief as To April 15 Filing Deadline

Yesterday the Internal Revenue Service issued Notice 2020-17, it providing that final 2019 tax payments that would otherwise be due April 15, 2019 (subject to extension) and estimated tax payments for 2020 likewise due April 15, 2020, will not be doing owing until July 15, 2020.  
The IRS has not, notwithstanding repeated requests from various organizations including the American Society of CPAs, extended the April 15, 2020 general due date for 2019 tax returns.  
These rules apply to federal taxes; you will need to check as to each state in which you file to see if similar relief is being granted.

Postscript: On Friday, March 20, it was announced (HERE IS A LINK) that the due date for federal tax returns is being pushed back to July 15.  Whether and how the states will conform their filing deadlines remains to be seen.

Tuesday, March 17, 2020

Kentucky Secretary of State - CoronaVirus

Kentucky Secretary of State - CoronaVirus

      The Kentucky Secretary of State has released guidance as to how that office will be changing its procedures in response to the CoronaVirus situation:

Good Morning,

            I would like to take the opportunity to share some of the latest updates that may affect your services. 

            Effective 5:00p.m. today, the Secretary of State’s office will be closed to walk in services.  In addition, agencies have been requested to reduce staff by at least 50% and the ability for some employees to work from home if telecom is possible.  Therefore many of our customers may experience some delays.  For regular walk-in services that are normally provided, we are amending our procedures as follows:

UCC Filings

All  UCC Filings should be filed through our website electronic filing system In the event that the collateral description is too lengthy for the 8000 character limit, we are permitting UCC Filings to be mailed to our office or faxed to 502-564-5687 with payment information.  For filings that are faxed, once processed, we will fax or email the file stamped acknowledgement back to the remitter. The UCC Filing will receive the date the fax is received in the office.  Although we will try to process as quickly as possible, it may take up to the three day statutory deadline.

UCC Searches

Certified Searches and copy requests can still be requested by fax or mail.  Please indicate in section three of the UCC Information Request form ( )if you wish to have the completed requests returned by fax, email, or mail.   

Business Filings

A business filings can be mailed or emailed to Vanessa Miller ( )for processing.  The file stamped acknowledgement will be returned via email.  Payment receipts will be provided upon request.  Business filings have a five day statutory deadline.

Annual Reports

Annual reports can be submitted electronically ( ) or by mail. 

Business Records

All business record requests can be requested by fax or mail.  Please indicate on the form ( ) if you wish the completed request to be returned by email or fax.  If not indicated, the processed requests will be mailed.  Business records have a three day statutory deadline.


The only  option available for these documents is for the documents to be submitted by mail.  Please include the request form when mailing.

Trademark/Service Mark

Applications for trademark/service mark can be submitted by mail.

Notary Applications

These applications can be submitted online ( or by mail (

Although everyone is beginning to feel the effects of the ongoing changes, please be patient with our office as we try to provide the best level of customer service as possible.  If you have any questions, please feel free to contact any of us directly.

Thank you.

Michelle Mullins 502-782-7450

Vanessa Miller 502-782-7436

Donna Williams 502-782-7444

Johnna Ballinger 502-782-7442

Michelle Mullins

UCC Branch Supervisor

Office of the Kentucky Secretary of State

UCC Branch

P.O. Box 718

700 Capital Ave.,. Ste. 158

Frankfort, KY 40601


(fax) 502-564-5687

Sunday, March 15, 2020

Beware the Ides of March

Beware the Ides of March

“Et tu, Brute?”

Today, the Ides of March, marks the anniversary of the assassination of Julius Caesar in 44 B.C. Caesar was famously assassinated at a meeting of the Roman Senate after having (almost certainly apocryphally) been warned to “Beware the Ides of March.” According to Seutonius, The Lives of the Twelve Caesars, “When a note revealing the plot was handed him by some one on the way, he put it with others which he held in his left hand, intending to read them presently.”Marc Antony, to whom the plot had been divulged, tried to intercept Caesar, but he was himself interrupted. As for the Beware” waring, Seutonius wrote: “Again, when he [Caesar] was offering sacrifice, the soothsayer Spurinna warned him to beware of danger, which would come not later than the ides of March.  …. [H]e entered the House [the Theater of Pompey] in defiance of portents, laughing at Spurinna and calling him a false prophet, because the ides of March were come without bringing him harm. Spurinna replied that they had of a truth come, but they had not gone.”
Although stabbed twenty-three times by the various conspirators, only one wound was fatal. At the time of his death he was 56, and by some measures was among the richest men to have ever lived.

      Caesar rose to power out of the First Civil War that resulted from the dissolution of the First Triumvirate, it comprised of Caesar, Pompey (a/k/a Pompey Magnus) and Crassus. Crassus was killed when he invaded Parthia.  The relationship between Caesar and Pompey fell apart over person differences, and Pompey was killed in Egypt.  
      Caesar’s murder by members of the Senate (some 60 senators were part of the plot, but not Cicero – the conspirators were unsure he had the stomach for such an act) was premised upon the notion that they were somehow preserving liberty for Rome; after the deed they paraded through the streets shouting “liberty.”  This against the fear that Caesar sought to be king, an especially galling notion in light of Rome having been, at least as part of its foundation myth, ruled by kings and then thrown them off.  Still, at this stage Caesar had been appointed Dictator for Life (Dictator Perpetuo) by the Senate.  It seems this subset of the Senate sought to undo what the whole Senate had approved. 

      As set forth in Adrian Goldsworthy’s biography of Caesar titled (surprisingly) Caesar:

The conspirators spoke of liberty, and believed that this could only be restored by removing Caesar. Most, perhaps all, thought they were acting for the good of the entire Republic. With Caesar dead the normal institutions of the State ought to function properly again and Rome could be guided by the Senate and freely elected magistrates. To show that this was their sole aim they decided they would kill the dictator but no one else, including his fellow consul and close associate Antony. Brutus is said to have persuaded them to accept this, against the advice of some of the more pragmatic conspirators.

      The huddled masses of Rome were less worried about Republican principles than they were with the loss of Caesar’s largess and the interruption of public work programs that provided desperately needed employment. As recounted by Nicolaus of Damascus in his Life of Augustus, “Even their [The assassin’s] houses were besieged by the people, not under any leader, but the populace itself was enraged on account of the murder of Caesar, of whom they were fond, and especially when they had seen his bloody garment and newly slain body brought to burial when they had forced their way into the Forum and had there interred it.” 
      “Liberty” was not to be had. Caesar’s death unleashed upon the tottering Roman Republic the Second Civil War of Caesar’s heir Octavian (18 years old at the time of Caesar’s death and later to be Caesar Augustus) and Marc Antony (Lepidus, the third member of the Second Triumvirate, was a place holder) against the assassins and their various supporters. Octavian and Antony were not friends. Rather, applying the adage “the enemy of my enemy is my friend,” they were joined in opposition to Caesar’s assassins and little else. Regardless, the decision of the night before the assignation to not as well target Marc Antony, in retrospect, was no doubt regretted.
      Assassins Brutus and Cassius (Gaius Cassius Longinus) would each commit suicide after losing a phase of the Battle of Philippi (notwithstanding the presentation in the HBO series “Rome,” they died on different days).  Cicero (who as noted above was not himself part of the conspiracy) would be executed as part of the proscriptions after the victory of the Second Triumvirate. 
      Still later Octavian and Antony would turn on one another, Antony’s forces being routed at Actium.  Octavian would go on to be the first Roman emperor, Caesar Augustus.
      But back to Caesar’s dying words. “Et tu Brute” is not recorded by any classical historian – it is a quote from Shakespeare. Plutarch, who was born exactly 100 years after the assassination, reports that Caesar said nothing after the attack began in earnest. Suetonius wrote that others reported his last words to be “καὶ σύ, τέκνον” (Greek still being the lingua franca of the Romans), transliterated as “Kai su, teknon” or “You also child,” addressed to Brutus (that is Marcus Junius Brutus the Younger, not to be confused with Decimus Junius Brutus, another party to the assignation). There were rumors, later reported by Plutarch (Suetonius is silent on the topic) that Caesar was in fact Brutus’ father – it was known that Brutus’ mother Servilia was Caesar’s mistress.  Still that would appear to be something of a stretch; Caesar was 16 at the time of Brutus' conception; Servilla was at that time 28.  
      For anyone who watched the “Spartacus” series, while the sources do not exclude Caesar's participation in the war against Spartacus (i.e., the “Third Servile War”), they provide no details of that participation.  Ergo, the portrayal of Caesar's actions are pure fiction.

Thursday, March 12, 2020

Arizona v. California

Arizona v. California

      California and the California Franchise Tax Board apply an exceptionally broad definition to what constitutes “doing business” in California, with the effect that more and more out-of-state companies and individuals are obligated to file California tax returns and of course pay taxes to Sacramento. A particular application of this rule is that companies organized outside of California that are themselves members of California LLCs are required to qualify to transact business in California

      In March, 2019, the State of Arizona filed a lawsuit in the United States Supreme Court pursuant to the “original jurisdiction” thereof against California, alleging that California practice of so broadly requiring qualification is unconstitutional. On February 24 of this year, the US Supreme Court denied leave to file that complaint; in consequence that lawsuit will not go forward.  Justice Thomas, joined by Justice Alito, filed a dissent from the denial of the motion for leave to file the complaint, asserting, inter alia, that the original jurisdiction of the Supreme Court is mandatory and the Court does not have the discretion to refuse to hear the issue, essentially leaving Arizona with no judicial forum for resolution to its complaint.

       But for now that is what has happened.

Wednesday, March 11, 2020

LLC Members Beware, There Can Be Personal Liability for the LLC’s Violation of Copyright Law

LLC Members Beware, There Can Be Personal Liability
for the LLC’s Violation of Copyright Law

      A recent decision from a Federal District Court in Alabama serves as a useful reminder that, notwithstanding that members of an LLC enjoy limited liability from its debts and obligations, those same members can be held liable when the LLC violates federal copyright law. Joe Hand Promotions, Inc. v. Alburl, Case No.: 5:18-CV-1935-LCE, 2020 WL 836844 (N.D. Ala. Feb. 20, 2020). 

       Joe Hand Promotions, Inc. (“JHP”) held the rights to distribute the Mayweather v. McGregor boxing match that took place in August, 2017. The Sidelines Pub & Grub, it owned by Sidelines33, LLC, broadcast the fight to its patrons without having entered into an appropriate licensing agreement with payment of the licensing fee. That it would be broadcasting the fight was publicized by Sidelines on its Facebook page. JHP brought suit against the LLC and against each of its owners, Scott Alburl (“Alburl”) and Angie Alburl (“Angie”), alleging that each was liable for the copyright violation. Neither the LLC nor Alburl responded to the complaint, and default was entered against them. Angie, who previously had been married to Scott but, in the meantime, had divorced him, did respond, and this decision addressed her argument that as she was only a 10% member in the LLC, she could not be held personally liable for its copyright violation. 

      Liability for breach of copyright law can extend beyond the business organization itself to its constituent owners and other representatives. As quoted in this decision, vicarious liability for copyright violations can extend to:

A person, “including a corporate officer, who has the ability to supervise infringing activity and has a financial interest in that activity, or who personally participates in that activity is personally liable for the infringement,” Southern Belle Tel. & Tel. Co. v. Associated Tel. Directory Publishers, 756 F.2d 801, 811 (11th Cir. 1985) (citation omitted).
      Angie would allege that Alburl had complete control over the business and operations of the company, her activity being limited to occasionally serving as a daytime manager and bartender and that:
all of the unlawful activity alleged in the complaint fell under the purview of Scott R. Alburl and was orchestrated and carried out by him without her knowledge or assent. [Angie] also stated that, even if she had known about her former husband’s activities with respect to the [Mayweather v. McGregor match] she would not of been able to stop him because, she says, Alburl was abusive and deceitful towards her in their marriage. 2020 WL 836844, *4.
From there, the court characterized the issue as: 

Assuming that [Angie’s] allegations are true, this Court must determine whether, despite her alleged limited ownership and control of Sidelines33, LLC, she can still be held vicariously liable for the infringing conduct of Alburl and Sidelines, LLC.  Id.
      The court would hold that Angie’s relatively small 10% interest in Sidelines33, LLC was not a limiting factor or a basis for denying summary judgment with respect to liability for the copyright violation. In consequence, summary judgment as to liability was granted. The determination of damages will await a jury trial.

Tuesday, March 10, 2020

Tax Court Addresses Lack of Control and Marketability Discounts in Family LLCs

Tax Court Addresses Lack of Control and Marketability Discounts in Family LLCs

      In a recent decision from the United States Tax Court, there were reviewed the valuations of certain gifts in a pair of family LLCs. Grieve v. Commissioner of Internal Revenue, T.C. Memo. 2020-28 (March 2, 2022). 

      While the court’s review of the facts and the competing valuations are quite detailed, and should obviously be reviewed by anybody practicing in the area, the most interesting takeaways from the opinion are the discounts that were ultimately afforded. With respect to the lack of control discount, both 13.4% and 12.7% were approved, respectively, for each of the LLCs. In addition, each LLC was afforded a lack of marketability discount of 25%.

Saturday, March 7, 2020

The Passing of Thomas Aquinas

The Passing of Thomas Aquinas

      Today marks the anniversary of the death, in 1274, of St. Thomas Aquinas (Tommaso d’ Aquino), the brilliant Dominican Friar whose whole life’s work constitutes the basis of Thomistic Theology.

      A student and protégé of St. Albert the Great (Albert Magnus), he is best known for his monumental (although it his death unfinished) Summa Theologica. 

      Thomas was canonized a Saint of the Catholic Church and holds the title of the Angelic Doctor.

Friday, March 6, 2020

Why I Teach

Why I Teach

      People sometimes ask me why I teach, primarily at the University of Kentucky Rosenberg College of Law. I tell them that it is time consuming and exhausting, but at least it doesn’t pay very much. That said, every now and then a former student says something that makes all of it worthwhile.

      HERE IS A LINK to a recent interview with Aurelia Skipwith, a graduate of the University Kentucky College of Law who took my Business Planning class; she is now the Director of the U.S. Fish and Wildlife Service.

Securities and Exchange Proposes to Relax Limits on Private Offerings

Securities and Exchange Proposes to Relax Limits on Private Offerings

     On March 4, the SEC released a (341 page long) proposal setting forth certain possible changes to the rules governing private offerings with the aim to make two of those forms, namely RegulationA+ and Crowdfunding, more available. 

     With respect to RegulationA+ offerings, the maximum size would be increased from $50 million to $75 million. RegulationA+ offerings are themselves in the nature of a small public offering, but they entail fewer disclosure obligations. That said, the increase to $75 million offerings would be restricted to “Tier 2” companies, and they are required to include audited financial statements in their RegulationA documentation. At the same time, the upper limit for Tier 1 RegulationA+ offerings would be increased from $15 million to $22.5 million.

     With respect to Crowdfunding, which has overall seen relatively little utilization, the maximum amount that could be raised would be increased from $1.07 million to $5 million. Also, the limit in any individual investor could devote to crowdfunding offerings would be increased.

     In another proposal in the release would allow companies to engage in further communications efforts with prospective investors before deciding upon which private offering approach they would utilize.

Thursday, March 5, 2020

LLCs Are Not Corporations

LLCs Are Not Corporations

      On the Business Law Prof Blog, in a posting dated February 25 titled LLCs Are Not Corporations: A New Hero Emerges, Dean Joshua Fershee reviews a recent decision in which the plaintiff was called to task for identifying the purported plaintiff as a “limited liability corporation.Of course, there is no such organizational form.

      HERE IS A LINK to that post.

Wednesday, March 4, 2020

The Ability of the Estate of a Deceased Limited Partner to Maintain A Derivative Action

The Ability of the Estate of a Deceased Limited Partner to Maintain A Derivative Action

      Peter Mahler, in his blog New York Business Divorce, on February 10 posted a piece reviewing a recent New York decision on a derivative action brought by a limited partner. After the action was initiated, that limited partner died. Which brought to the fore the question: can the estate of a limited partner, which itself is not a limited partner but rather an assignee, continue to prosecute a derivative action that, ab initio, must be brought and maintained by a limited partner? Particularly, this decision would turn upon a provision of the New York Limited Partnership Act that provides that the legal representative of the deceased partner may exercise the decedent’s rights “for the purpose of settling his or her estate or administering his or her property.” 

      In this instance, and in reliance upon prior law, it was held that substitution of the estate with the capacity to continue the derivative action would be denied.

      The title of Peter’s posting is Death of Limited Partner Disarms Derivative Action; HERE IS A LINK to that post.

Tuesday, March 3, 2020

Getting Materiality Right and Wrong

Getting Materiality Right and Wrong

      Professor Ann Lipton of Tulane has published on the Business Law Prof Blog Three Times Federal Courts Got Materiality Wrong, and One Time They Didn't. As is typical for anything that Ann writes, this is an insightful review of a confusing area, it made less confusing by her analysis. 

      HERE IS A LINK to that posting.