ONE MORE REASON FOR A NONCOMPETE AGREEMENT — INEVITABLE DISCLOSURE DOCTRINE
A noncompete agreement is a standard business agreement to prevent a former employee from competing against you upon his departure from the company. When such an agreement is not in place, employers have to scramble for a solution to prevent the former employee from disclosing confidential information to the new employer. In particular, litigators are […]
WHO WANTS CAKE? SECTION 368 TAX-FREE REORGANIZATIONS FOR CORPORATIONS
Derek P. Usman, The Usman Law Firm, P.A. After making the decision to dispose of a corporation, entrepreneurs and business owners should consider tax consequences and plan accordingly. Often, an exit strategy utilized by a private corporation is the acquisition of the corporation by a public company whose shares are readily saleable because they […]
THE THREAT IS REAL – THE FIGHT FOR LIMITED LIABILITY IN ILLINOIS
Derek P. Usman, The Usman Law Firm, P.A. The statutory provisions providing limited liability to shareholders of Illinois business entities were undermined recently when the Illinois Supreme Court endorsed “direct participation” as a viable theory of tort liability under Illinois law. In Forsythe v Clark USA, Inc., 2007 WL 495292 (Ill. Sup. Ct.), our […]
The Significance of Share Transfer Restrictions for Closely held Corporations
Derek P. Usman, The Usman Law Firm, P.A. While public corporations thrive on share trading in a dynamic market, private corporations often seek to restrict transfer of their shares. In particular, entrepreneurial enterprises foster the inclusion of non-management investors. These silent partners of closely-held corporations often require protective measures for their interests. Therefore, a […]
SHAREHOLDER LOANS MADE SIMPLE
Derek P. Usman, The Usman Law Firm, P.A. Shareholders of a corporation taxed under Subchapter S of the Internal Revenue Code may elect a “pass-through” taxation system. Subsequently, a corporation’s profits pass through directly to its shareholders on a pro rata basis and are reported on the shareholder’s individual tax returns. The basis […]
INSIDE OUT – REVALUATION OF PARTNERSHIP CAPITAL ACCOUNTS
Derek P. Usman, The Usman Law Firm, P.A. Foremost, a capital interest is a share of the value of partnership assets. Each partner has a separate capital account that generally tracks that partner’s investment in the partnership. The value of the capital account represents the partners’ distributive share of partnership equity (partnership assets minus […]
PHANTOM GAIN – IT’S MAGIC
Derek P. Usman, The Usman Law Firm, P.A. “MINIMUM” GAIN ARISING FROM PARTNERSHIP NONRECOURSE DEBT Section 702(a) provides a list of items arising from partnership operations that are to be separately distributed to each partner. Subsequently, the partner takes into account his distributive share of the partnership items in determining his income tax. […]
MINORITY SHAREHOLDERS RECEIVE A CHRISTMAS GIFT FROM THE GOVERNOR
Derek P. Usman, The Usman Law Firm, P.A. Effective January 1, 2007, amendments to the Illinois Business Corporation Act now provide a more precise definition of the fair value of minority interests. The new Illinois legislation is quite similar to the 1999 amendments to the Model Business Corporation Act. The Illinois Business Corporation Act […]
A Matter of Trust: Closely-held derivative lawsuits
Derek P. Usman, The Usman Law Firm, P.A. A shareholder may initiate a direct action lawsuit against a corporation to redress an injury inflicted by the corporation upon the shareholder. However, a shareholder may also assert a cause of action on behalf of the corporation. Such a suit, a derivative lawsuit, arises against officers […]
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