The Cummings & Cummings Law Journal

Understanding Deal Structure Choices Drives Tax Outcomes Private equity buyouts are often described in shorthand as either “asset deals” or “stock deals,” but the tax reality is considerably more nuanced. The classification of a transaction as an acquisition of assets, equity, or partnership interests establishes the legal and tax framework for every other decision, including

Understanding the Unique Tax Landscape for Stock Option Grants to Nonresident Alien Contractors Granting equity to nonresident alien contractors is deceptively complex. From the standpoint of an attorney and CPA, I caution founders and finance leaders that the U.S. tax rules intertwine compensation sourcing, withholding regimes, treaty claims, and securities compliance in ways that are

Understanding Tax Residency Versus Immigration Status Tax residency is the keystone of international tax analysis for digital nomads, yet it is frequently misunderstood. Immigration permission to stay in a country (for example, a tourist visa or visa waiver) does not determine whether that country considers you a tax resident. Instead, tax residency is typically defined

Understanding the Narrow Circumstances Under Which Bearer Shares Remain Permissible Bearer shares are equity instruments where legal title rests with the possessor of the physical certificate, historically enabling anonymous ownership and frictionless transfer. While this feature was once marketed as efficient and confidential, it is now broadly incompatible with contemporary anti–money laundering and tax transparency

What a Joint and Several Liability Clause Means in Practice A joint and several liability clause authorizes a creditor to hold any one co-obligor responsible for the entire obligation, regardless of internal arrangements among the parties. In essence, each obligor promises to shoulder both the collective liability and the individual liability of the group. This

Understand the Regulatory Framework Driving Beneficial Ownership Certifications A beneficial ownership certification for a commercial loan is not a mere administrative form; it is a compliance instrument designed to help financial institutions satisfy customer due diligence obligations. Banks, credit unions, and nonbank lenders are required to identify and verify certain individuals who ultimately own or

Understanding the Reverse Morris Trust Transaction A Reverse Morris Trust transaction is a sophisticated, tax-efficient method for a parent corporation to divest a business line by combining a tax-free spin-off with a strategic merger. Properly executed, it permits the parent to separate a business on a tax-free basis under Section 355 and concurrently merge that

What a Restructuring Support Agreement Is and Why It Matters A Restructuring Support Agreement (RSA), sometimes called a “plan support agreement,” is a binding contract among a debtor and key stakeholders to support a specified restructuring path in a Chapter 11 case. At its core, an RSA frames the “deal” that will be implemented through

Understanding the Modern Landscape of Restrictive Covenants Restrictive covenants in employment agreements—such as non-compete, non-solicitation, and confidentiality provisions—occupy a legally sensitive intersection of contract, employment, and trade secret law. The enforceability of these provisions depends upon state-specific statutes, evolving case law, and, increasingly, federal scrutiny. What appears to be a “standard” clause copied from a

Understanding the Nature of Partnership Liability At its core, a partnership is not simply a cooperative venture between colleagues. It is a legal relationship that creates joint and several liability for the partners in a general partnership. This means that a single partner may be responsible for the full amount of partnership debts and obligations,

Understanding Shareholder Deadlock: What It Is and Why It Matters Shareholder deadlock is not merely a disagreement. It is a sustained inability of the corporation’s owners or directors to secure the required votes to make decisions on matters central to the company’s operation, financing, or strategy. In closely held companies with two equal owners, deadlock

Understand the Purpose and Regulatory Context Director stock ownership guideline policies are designed to align the long-term economic interests of directors with those of shareholders. The policy signals that directors have meaningful “skin in the game,” that they experience both upside and downside, and that they steward capital with personal accountability. While this concept appears

Understanding the Purpose and Structure of a Tri-Party Agreement in Construction Financing A tri-party agreement in construction financing is a negotiated contract among the owner (or developer), the lender, and the general contractor that aligns payment mechanics, performance obligations, and remedies across all parties. Although many stakeholders assume that the construction contract and the loan

Understand What a Settlor-Directed Trust Actually Is A settlor-directed trust is a trust in which the settlor reserves or formally designates the power to direct investments, while a separate trustee handles administrative functions such as custody, compliance, accounting, and distributions. In many jurisdictions, this is enabled by a directed trust statute that bifurcates fiduciary responsibility

What Defines an Independent Board Chair in Practice An Independent Board Chair is more than a title and more than an exercise in box-checking. At its core, independence means the Chair has no material relationship with the company other than service on the board, is not a current or former member of management, and is

Understanding the Cold Comfort Letter in the Context of Tax A cold comfort letter is an attestation delivered by an independent registered public accounting firm to underwriters or initial purchasers in connection with a securities offering. Although it is not a tax opinion and does not opine on the issuer’s tax positions, the engagement and

Understanding the Role of Boilerplate Clauses in Modern Contracts Boilerplate clauses are standardized provisions that appear in most agreements, often at the end, covering topics such as governing law, notices, assignment, and dispute resolution. Although they can appear generic, these clauses allocate risk, determine remedies, and control the procedural rules that apply if a dispute

Understanding Capital Maintenance Agreements in Regulated Industries A capital maintenance agreement is a legally binding commitment by a parent company to ensure that a subsidiary maintains minimum financial resources, typically framed around net worth, risk-based capital, or other solvency measures. In regulated industries such as banking, insurance, broker-dealers, utilities, and healthcare, supervisors often expect formal,

Understanding the Purpose and Forms of Sunset Provisions In practice, a “sunset” provision in a shareholder agreement is a negotiated mechanism that terminates or scales back specified rights after a defined period or upon achievement of measurable business milestones. Common examples include the automatic expiration of super-voting rights after an initial public offering, the phase-out

Understanding What Qualifies as a Capital Loss for a C Corporation Capital losses in a C corporation arise from the sale or exchange of capital assets for less than their adjusted basis. While this definition appears straightforward, the characterization of an asset as “capital” is not always intuitive. Corporate portfolios often include marketable securities, partnership