#equity

Equity

Understanding owner equity, retained earnings, and shareholders equity on the balance sheet

July 17, 2026

FASB ASU 2025-12: The APIC-Only Method for Retiring Shares in a Co-Founder Buyout

FASB's ASU 2025-12 (Issue 10) codifies a third method for retiring repurchased shares — charging the full excess over par value to additional paid-in capital, as long as APIC stays non-negative. Here is how the APIC-only, retained-earnings-only, and allocation methods change the balance-sheet impact of a co-founder buyout, and why the choice matters for loan covenants and dividend capacity before the December 15, 2026 effective date.

mike

accountingequityfinancial-reporting

June 4, 2026

Section 1202 QSBS After the One Big Beautiful Bill Act: Tiered Holding Periods, the $15 Million Cap, and Trust Stacking

How the One Big Beautiful Bill Act rewrote Section 1202 QSBS — a tiered 50/75/100% gain exclusion at three, four, and five years; a $15 million per-issuer cap; a $75 million gross asset threshold at issuance; and non-grantor trust stacking that can lift a founder's combined exclusion well past the single-taxpayer limit.

mike

taxtax-planningequity

June 2, 2026

Section 1202 QSBS Exclusion: A Founder's Guide to $15 Million in Tax-Free Gains

Section 1202 lets founders, early employees, and angel investors exclude up to $15 million of capital gains from federal tax. This guide covers the OBBBA changes, the five eligibility gates, the new 3/4/5-year tiered holding period, Section 1045 rollovers, and stacking strategies that multiply the per-issuer cap across family members and non-grantor trusts.

mike

tax-planningcapital-gainsstartup

June 1, 2026

Section 1361 S-Corporation Eligibility: The Hidden Rules That Can Quietly Terminate Your Election

Section 1361 sets five eligibility rules for S-corporations—domestic incorporation, 100-shareholder cap, eligible shareholders, one class of stock, and entity type. Routine business decisions like uneven distributions or a relocated shareholder can terminate the election; Section 1362(f) offers PLR-based relief that costs $30,000+ in user fees.

mike

s-corporations-corptax-compliance

May 18, 2026

DuPont Analysis Demystified: How to Decompose Return on Equity Into the Three Levers Owners Actually Control

A practical guide to DuPont Analysis — how to split return on equity into net margin, asset turnover, and the equity multiplier (3-step), or further into tax and interest burdens (5-step), with worked examples, trade-offs, and the pitfalls that catch people who apply it mechanically.

mike

financial-ratiosfinancial-analysisprofitability

May 17, 2026

Opening Balances Done Right: Mid-Year Setup and Clearing the OBE Account

Opening Balance Equity is the suspense account accounting software creates to keep the balance sheet in balance during migration. Build a supportable opening trial balance, reconcile every account at the cutover date, then journal OBE into Retained Earnings, Owner's Capital, or Common Stock and Additional Paid-in Capital based on entity type.

mike

bookkeepingmigrationjournal-entries

May 14, 2026

Regulation D Rule 506(b) vs Rule 506(c): How Founders Pick Between the Quiet Round and the Public Pitch in 2026

Rule 506(b) and Rule 506(c) of Regulation D both allow uncapped private placements but differ sharply on marketing and verification. 506(b) bans general solicitation and permits up to 35 sophisticated non-accredited investors on a reasonable-belief standard; 506(c) permits public solicitation but requires reasonable steps to verify every purchaser is accredited. A March 2025 SEC no-action letter lets issuers rely on $200,000+ individual or $1 million+ entity minimum checks as the primary verification step.

mike

fundraisingcapital-raisingstartup

May 14, 2026

Section 83(i) Tax Deferral on Private Company Stock: A Five-Year Lifeline for Pre-IPO Employees with RSUs and NSOs

Section 83(i) lets qualified employees of qualified private companies defer federal income tax on RSU settlements and NSO exercises for up to five years. The 80 percent grant rule, mandatory escrow, and 30-day election deadline explain why adoption stays in the single digits — and when the election still pays off.

mike

taxtax-planningequity

May 13, 2026

Section 83(i) Explained: A Five-Year Tax Deferral for Private-Company RSUs and NSOs

Section 83(i) lets qualified rank-and-file employees at eligible private companies defer federal income tax on RSU vests and NSO exercises for up to five years, but FICA is still due at vesting, the 30-day election window is unforgiving, and the 80 percent broad-based grant rule keeps most startups from offering it.

mike

taxtax-planningtax-compliance

May 12, 2026

Section 83(b) Election: The 30-Day Window That Saves Founders From a Phantom Tax Bill

How the IRS Section 83(b) election converts phantom ordinary income on unvested startup stock into long-term capital gains, what the new Form 15620 online portal requires, and when filing is the wrong move.

mike

tax-planningtax-complianceequity

May 7, 2026

409A Valuations: A Founder's Guide to Stock Option Strike Prices and Safe Harbors

A 409A valuation is the IRS-recognized appraisal that sets the strike price on every option grant. Without one, founders risk 20% federal excise penalties, premium interest, and California's 5% piggyback tax — all falling on the employee.

mike

startupequity-instrumentsbusiness-valuation

May 7, 2026

Profits Interests Under Rev Proc 93-27: A Guide to Tax-Free LLC Equity Grants

Profits interests let LLCs grant equity to service providers tax-free under IRS Revenue Procedure 93-27. This guide covers the safe harbor's three conditions, the threshold value rule, Rev Proc 2001-43 vesting fix, and the self-employment tax tradeoff partners should expect.

mike

equity-instrumentsllcpartnerships

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