Startup SPVs Explained: How Special Purpose Vehicles Keep Your Cap Table Clean
An SPV pools many angel checks into one LLC and one cap-table line; backers pay 10–20% carry plus setup fees, and the lead votes the whole block.
#equity-instruments
Equity Instruments
Understanding stock, SAFE notes, convertible notes, and startup financing structures
Venture Debt for Early-Stage Startups: Borrow Runway Without Selling the Company
U.S. startups borrowed a record $68.8B of venture debt in 2025. Warrants cost 1-5% dilution, but covenant breaches - not missed payments - trigger most defaults
The Equity Method of Accounting, Explained: How to Book a 20–50% Ownership Stake
Under ASC 323, dividends from a 20–50% stake are not income — they reduce the investment. Here are the three journal entries and the basis-difference trap.
Reading Your First US Term Sheet: Valuation, Liquidation Preference, and the Control Terms Founders Miss
A $10M pre-money valuation with a 15% option pool values the founders' shares closer to $8.5M. A clause-by-clause walk through a priced-round term sheet — the option pool shuffle, 1x non-participating preference, full-ratchet anti-dilution, board seats and veto lists — with the math worked out.
The IRS's New Form 15620 for 83(b) Elections: What Startup Founders Need to Know About Filing Online in 2026
Form 15620 can now be submitted through an IRS Online Account, but the 83(b) election's 30-day deadline still has no routine extension. How the election works, when it pays, how to file online or by certified mail, and the six mistakes that sink it.
RSUs Explained for Startup Employees: Why Vesting, Not Selling, Is the Tax Event
RSUs are taxed as ordinary income on the vesting date, not at sale, and employers withhold a flat 22% on supplemental wages up to $1 million — leaving employees in the 32–37% brackets short by 10 to 15 percentage points each April. This guide covers double-trigger vesting at private startups, why no 83(b) election exists for RSUs, and the $0 cost-basis error on Form 1099-B that makes people pay tax twice on the same income.
Your QSBS Win Is Federal-Only in California: What Founders Owe the State on a 'Tax-Free' Exit
California does not conform to Section 1202, so a QSBS gain that is 100% excluded federally is taxed in full at state rates up to 13.3% — a $4 million exit can leave a founder owing roughly $350,000–$450,000 to Sacramento. This guide covers the 2025 QSBS expansion's new three- and four-year tiers, why California repealed its own exclusion, the real math on graduated brackets and the 1% surcharge, and what an FTB residency audit demands from founders who move before selling.
ASC 718 Nonemployee Share-Based Payments: A Startup Guide to Consultant, Advisor, and Contractor Equity
Under ASC 718 as amended by ASU 2018-07, startup equity granted to consultants, advisors, and contractors is measured at grant-date fair value and expensed as services are received — not when cash moves. This guide covers scope decisions, option-pricing inputs and nonpublic-company practical expedients, service vs. performance vs. market vesting conditions, keeping book expense separate from tax reporting, a three-record monthly reconciliation, and the ASU 2025-04 change for customer awards effective after December 15, 2026.
Phantom Stock Plans for Small Businesses: Reward Key Employees Without Giving Away Ownership
A phantom stock plan grants key employees hypothetical units that track company value and settle in cash — no shares issued, no dilution, no voting rights. Payouts are ordinary income subject to FICA when paid, the employer deducts them in the same year, and cash-settled awards are liability awards remeasured at fair value each reporting period. Paying within 2½ months after the year units vest satisfies Section 409A's short-term deferral exemption; a two-to-three-participant plan typically costs $4,000–$10,000 to launch.
The 2026 AMT Cliff: Lower Phaseout Thresholds, Twice the Clawback
For 2026 the OBBBA resets AMT phaseout thresholds to $500,000 single and $1,000,000 joint and doubles the exemption clawback from 25 to 50 cents per dollar, so the same income that owed no AMT in 2025 can owe five figures next year. A guide to who is exposed, how to estimate your position, and five planning moves before year-end.
Profits Interests, Explained: How LLCs Can Grant Equity Without Triggering a Tax Bill
A profits interest lets an LLC or partnership grant a service provider real equity with no tax at grant or vesting under Rev. Proc. 93-27 and 2001-43 — provided the distribution hurdle equals fair market value at grant, the interest is held two years, and the recipient accepts K-1 partner status. Here is how the safe harbor works, how the hurdle math is set, and the six mistakes that break the tax-free treatment.
FASB ASU 2025-07: The New 'Own Operations' Derivative Scope Exception for ESG-Linked Debt, Earnouts, and Customer Warrants
FASB's ASU 2025-07 adds an ASC 815 scope exception for non-exchange-traded contracts whose payoff depends on a party's own operations — ESG-linked interest rate step-downs, M&A earnouts, regulatory and product milestones, change-of-control triggers — and routes warrants received from customers through Topic 606 instead of derivative accounting. Effective for annual periods beginning after December 15, 2026, with early adoption permitted.