The Cummings & Cummings Law Journal

Understanding the “Transfer on Death” Concept for Business Interests A “Transfer on Death” (TOD) arrangement allows an owner to designate one or more beneficiaries to receive a specified asset automatically upon the owner’s death, without the delay and expense of probate. While many individuals are familiar with TOD registrations for brokerage accounts or payable-on-death (POD)

Assess Whether the Fund Itself Must Register or File in Each State Before any securities are offered or sold, a pooled investment fund sponsor should make a deliberate assessment of what, if any, state-level registrations or filings are required. Many managers mistakenly assume that federal law occupies the field and that a private offering conducted

Defining the Cash Sweep in Leveraged Buyouts Cash sweeps in leveraged buyouts refer to mechanisms in which a borrower must mandatorily use a portion of its annual or periodic excess cash flow to prepay outstanding debt. In many middle-market and large-cap LBOs, this concept is embedded in the credit documentation as an excess cash flow

What A “Short Year” Is And Why It Exists In federal corporate taxation, a “short year” (also called a short tax period) is any taxable year that spans fewer than twelve months. Although the phrase sounds straightforward, the circumstances that create a short year and the mechanics for reporting it are not intuitive. A short

Understand What Is Actually Being Transferred: The Franchise License Is Not a Free-Standing Asset Many sellers and buyers mistakenly assume that a franchise license can be transferred as if it were a freely assignable permit. In practice, a franchise license is one segment of a much larger contractual relationship controlled by the franchisor, and the

Understanding the IRC § 962 Election: A Corporate Lens for Individual Owners of CFCs For an individual United States shareholder of a controlled foreign corporation, the Internal Revenue Code offers an uncommon but powerful mechanism: the IRC § 962 election. In essence, this election allows an individual (including those holding CFC interests through pass-through entities)

Understanding Reverse Vesting and Why It Is Not “Just Paperwork” Reverse vesting is a structure in which founders purchase or otherwise receive their shares at the outset, but the company retains a contractual right to repurchase the unvested portion—typically at cost—if a founder departs before a defined vesting schedule is complete. Unlike options or restricted

Why Transfer Restrictions for LLC Membership Interests Matter More Than Owners Expect Owners frequently assume that membership interests in a limited liability company can be transferred with minimal paperwork and that buyers or heirs can automatically “step into the shoes” of an existing member. That assumption is both common and dangerously inaccurate. In most jurisdictions,

Understand What Enterprise Zones Actually Are Enterprise zones are designated geographic areas in which state and local governments offer targeted incentives to spur capital investment, job creation, and community revitalization. Although the label sounds uniform, the underlying rules vary materially by jurisdiction, and the statutory terms, administrative guidance, and local overlays interact in complex ways.

How MACRS Shapes Depreciation Timelines for Commercial Real Estate The Modified Accelerated Cost Recovery System (MACRS) is the cornerstone of federal depreciation for United States taxpayers and it exerts a profound influence on the cash flows, financial reporting, and ultimate tax outcomes of commercial real estate holdings. Under MACRS, nonresidential real property is generally depreciated

Understanding Cancellation of Debt Income in Real Estate Workouts When a lender forgives, settles, restructures, or otherwise cancels a portion of a real estate loan, the borrower may recognize cancellation of debt income. In most cases, the tax law treats the extinguished liability as income even though the borrower did not receive cash. This principle

Begin With a Contract That Anticipates Non-Payment Every lawful and effective response to non-payment begins long before the first invoice is ever sent. A well-drafted engagement agreement does not merely state your fees; it allocates risk, defines performance, and creates enforcement leverage. At a minimum, ensure your contract defines deliverables with objective milestones, clarifies client

What A Permanent Establishment Really Is And Why It Drives Double Taxation Risk Permanent establishment is a deceptively simple phrase that masks a dense web of treaty provisions, domestic statutes, and administrative guidance. In most income tax treaties, a permanent establishment, or PE, is a threshold concept that determines whether a foreign enterprise is subject

Understanding the “Drag-and-Drop” Signature: What It Is and Why It Matters A “drag-and-drop” signature typically involves selecting a stylized rendering of a name, initials, or symbol within a software interface and placing it onto a document to indicate acceptance. In many platforms, the user drags a signature field into position and applies a signature artifact

Understand What a Purchase Money Security Interest Is and Why It Matters A Purchase Money Security Interest (PMSI) is a form of security interest that gives a lender or seller super-priority in specific collateral when the credit extended enables the debtor to acquire that very collateral. In practical terms, a PMSI can leapfrog an earlier

Understanding What a Key Person Insurance Policy Is—and Why Partnerships Need It Key person insurance is a life or disability insurance policy that a business acquires on the life of a critical owner or employee whose loss would materially affect the enterprise’s revenue, credit relationships, or operational continuity. In a partnership, the financial dependence on

Understand What “Conversion” Really Means for Tax Purposes From a tax perspective, “converting” a partnership into a single-member limited liability company is not a single, uniform event. It is a sequence of legally distinct actions that the Internal Revenue Service analyzes under specific partnership and entity classification rules. A multi‑member LLC taxed as a partnership

Understanding a Partial Deficiency Sale in a Secured Transaction A partial deficiency sale arises when a secured party disposes of some, but not all, of the collateral and the net proceeds do not fully satisfy the secured debt, leaving a remaining balance known as the deficiency. This scenario often occurs when collateral consists of multiple

Understanding “Complete Liquidation” For An S Corporation A “complete liquidation” of an S corporation is not a single act; it is a sequence of deliberate steps in which the entity winds up operations, sells or distributes all assets, settles all liabilities, and terminates its legal existence under state law. In tax terms, a complete liquidation

Understanding Appraisal Rights: What They Are and Why They Matter Appraisal rights, often called dissenters’ rights, allow certain shareholders who disagree with a fundamental corporate transaction to demand a judicial determination of the fair value of their shares and receive cash in that amount instead of the deal consideration. These rights exist primarily under state