Blog of the startup attorneys at Carney Badley Spellman PS of Seattle
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 timing. Let’s unpack how it works and what … Read more
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 tax on the fair market value of the shares … Read more
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 fields such as health, law, … Read more
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 statutory limit at the time of … Read more
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 may leave additional gains exposed to tax. Fortunately, … Read more
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 to know in 2025. 1. New QSBS Rules … Read more
