The Cummings & Cummings Law Journal

Understanding Who the “Foreign Entity” Is and Why Classification Matters Before any foreign organization commits funds to a U.S. charity, it is essential to define precisely what the donor is. The U.S. tax code distinguishes among foreign corporations, partnerships, trusts, estates, and disregarded entities, and each category can encounter significantly different tax and reporting outcomes.

Defining the Co-Packing Relationship and Scope of Work A co-packing agreement in the food and beverage industry is not a simple “make-and-ship” arrangement. It is a complex, ongoing commercial relationship that must precisely allocate duties for formulation, ingredient sourcing, manufacturing, packaging, quality assurance, and delivery. An effective agreement begins with a detailed scope of work

Understanding Earn-Out Clauses in Mergers and Acquisitions An earn-out clause is a contingent payment mechanism that defers a portion of the purchase price based on the post-closing performance of the target business. In practice, it is a bridge over a valuation gap, allowing a seller to participate in upside that may not be fully reflected

Confirm State Law Authority and Governing Document Compliance Before a company hosts a virtual shareholder meeting, the first legal inquiry is whether the applicable state corporate statute permits virtual-only or hybrid meetings, and under what conditions. Many jurisdictions explicitly authorize remote meetings if certain technological conditions are satisfied, such as the ability to verify participants,

The Regulatory Meaning of “Covered” Versus “Non‑Covered” Activities Is Not Intuitive In health care, the simple question “Is this activity covered?” rarely has a simple answer. Covered activities can refer to several distinct regulatory regimes: the Health Insurance Portability and Accountability Act (HIPAA) rules for covered entities and business associates; Medicare and Medicaid reimbursement rules;

Why Entity Type Drives the Tax Result in a Merger At a high level, many business owners assume that a merger simply combines two balance sheets and operations, and that the tax consequences are largely incidental. That assumption is dangerous. The federal and state tax outcomes turn on the tax classification of each party: C

Understanding What Constitutes a Complete Liquidation of an S Corporation A complete liquidation of an S corporation is not simply “closing the doors.” It is a legally and tax-significant process in which the corporation ceases business, winds up its affairs, sells or distributes its assets, pays creditors, and makes one or more liquidating distributions to

Understand What Qualifies as a Trade Secret Before Diligence Before any documents are uploaded, described, or even summarized to a prospective buyer, you must align your team on what specifically constitutes a trade secret. Under typical U.S. standards, a trade secret includes any information that derives independent economic value from not being generally known and

Interpreting the Venture Capital Term Sheet: Economics and Control The term sheet is often mistaken as a simple summary, but it is a negotiated roadmap that determines both the economics and governance of your company for years. As an attorney and CPA, I advise clients to treat each clause as a binding expectation, even when

Understanding Debt Forgiveness in Real Estate Workouts Debt forgiveness in real estate workouts can be a complex and multifaceted issue, often misunderstood by property owners. When a lender forgives a portion of a borrower’s debt, it is not merely a financial relief; it also carries significant tax implications. These implications can affect an individual’s or

Understanding Cooperative Business Structures Cooperative business structures, often simply referred to as cooperatives, are unique entities that prioritize the needs and goals of their members over profit maximization. These structures are owned and operated by a group of individuals for their mutual benefit. While cooperatives can take various forms, including worker cooperatives, consumer cooperatives, and

Understanding the Concept of Waterfall Distributions In the realm of real estate funds, the term waterfall distribution refers to the structured process by which profits are allocated among investors. This concept is crucial for both fund managers and investors to understand, as it dictates the order and manner in which returns are distributed. The complexity

Understanding the Importance of a Corporate Amnesty Program for Whistleblowers Implementing a corporate amnesty program for whistleblowers is a complex yet crucial initiative for any organization aiming to foster transparency and accountability. Such programs are designed to encourage employees to report unethical or illegal activities without fear of retaliation. The intricate nature of designing these

Understanding the Importance of Pre-Immigration Tax Planning Pre-immigration tax planning is an essential process for individuals considering relocation to the United States. This process involves a comprehensive evaluation of one’s financial and tax situation before making the move. The complexity of U.S. tax laws, combined with the unique financial circumstances of each individual, necessitates a

Understanding the Franchise Agreement When considering the transfer of a franchise license upon the sale of a business, the first crucial step is to thoroughly understand the franchise agreement. This document is the cornerstone of the franchise relationship and outlines the rights and obligations of both the franchisor and the franchisee. Typically, the agreement will

Understanding the “Change of Control” Covenant In the realm of senior credit facilities, the “change of control” covenant is a critical component that requires meticulous attention. This covenant is designed to protect lenders by allowing them to reassess or even terminate the credit agreement if there is a significant change in the ownership or control

Understanding Capital Losses in a C Corporation Capital losses in a C Corporation represent a complex area of corporate taxation that requires meticulous documentation and understanding. A capital loss occurs when the sale of a capital asset results in a lower price than its purchase cost. While this may seem straightforward, the intricacies of documenting

Understanding Income Deferral for Businesses Income deferral is a strategic approach that businesses can utilize to manage their tax liabilities effectively. This technique involves postponing the recognition of income to a later tax year, thereby reducing the immediate tax burden. The process is often complex and requires a comprehensive understanding of tax regulations, making it

Understanding the Basics of the Qui Tam Provisions The Qui Tam provisions of the False Claims Act (FCA) serve as a powerful tool for whistleblowers to report fraudulent activities against the government. These provisions allow private individuals, known as relators, to file lawsuits on behalf of the government. In return, they may receive a portion

Understanding the Cross-Collateralization Clause In the intricate world of loan agreements, the cross-collateralization clause stands out as a pivotal yet often misunderstood component. This clause, frequently embedded within loan documents, can significantly impact borrowers and lenders alike. Its complexity underscores the importance of seeking guidance from an experienced attorney and CPA to navigate its implications