One of the more interesting and useful items to come out of the Tax Cut and Jobs Act of 2018 are the creation of so-called Opportunity Zones. An Opportunity Zone is a particular census tract which the government has designated as a distressed community, and investments in same are entitled to certain benefits vis a vis the investor’s capital gains taxes from such investment. The goal is to stimulate investments into such areas which would not otherwise have occurred.
The benefits that Opportunity Zones provides are related solely to the timing and possible reduction of an investor’s capital gains taxes. The program won’t apply to ordinary income tax issues, and there are no credits or other type of incentives provided for in the program (its less exciting than some folks originally thought but still a large benefit to the right investors/projects/companies though). The Opportunity Zones program provides for a delay, reduction or elimination of capital gains taxes in three ways as set forth below:
- First is a temporary tax deferral for any taxpayer who has capital gains but re-invests same, within 180 day time period, into an Qualified Opportunity Fund (discussed below). The gain is deferred but must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026 (there is some grey area with respect to holding the investment past December 31, 2026 and hopefully the IRS clears it up). You do not have to live or work in an opportunity zone, you just have to invest in it (in a company located in one or property located in one). IRS came out with this form for these re-investments – Form 8949
- Second is a step-up in basis for any capital gains that were invested (i.e. re-invested) in an Qualified Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the Qualified Opportunity Zone Fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
- Third is a total exclusion (i.e. the investor’s basis is increased to FMV) from taxable income of capital gains from the sale or exchange of an investment (but not the original capital gain which is handled by the second point above) in a Qualified Opportunity Zone Fund if held for more than 10 years.
The Opportunity Zone program allows funds to be set up, called Qualified Opportunity Zone Funds, which funds pool investor money (as a partnership or corporation) for investing in eligible property located in a Qualified Opportunity Zone (a list of such Qualified Opportunity Zones are set out in IRS Notice 2018-48 – https://www.irs.gov/pub/irs-drop/n-18-48.pdf )
To become a Qualified Opportunity Zone Fund, an eligible corporation or partnership self-certifies by filing Form 8996, Qualified Opportunity Fund, with its federal income tax return. Early-release drafts of the form and instructions are posted, with final versions expected in December. The return with Form 8996 must be filed timely, taking extensions into account.
So the wave of privacy laws originating in Europe has hit the United States. On June 28, 2018, the California Consumer Privacy Act of 2018 was signed into law (referred to in this post as the “Act” or the “Law”). It is both similar to, and distinct from, the GDPR. Companies should absolutely not assume that if they are GDPR compliant, that they would also compliant with the California law. The California law has broad out of state reach and violations carry serious monetary penalties, including actions from the Attorney General of the State of California, or individuals (either separately or as a class action). Companies should make sure they are out in front of this law. The date the Act is set to take effect is January 1, 2020. Read more
Any company that is subject to the GDPR, among other things, must ensure that it does and can timely comply with requests from any EU data subject with respect to the data subject’s rights under the GDPR, which are:
- Right of access – EU data subjects are entitled to know if their data is being processed and if so the terms of same.
- Right to rectification – EU data subjects have the right to correct information held by any controller.
- Right to erasure – Be ready to completely remove any EU data subject’s personal data from your systems (if anything cannot be removed they need to be told why) upon their request.
- Right to restriction of processing – Be ready to restrict certain EU data subject’s personal data from being processed in any manner in which a specific EU data subject states it no longer consents to (even if he/she provided consent for such processing earlier).
- Right to data portability – Be ready to provide a copy of each EU data subject’s personal data upon their request, and this can include sending it to the data subject or sending it to a third party. Your company should be able to comply with any request within 30 days at no charge to EU user.
- Right to object – Be ready to halt certain activities with respect to the personal data of any EU data subject if notice is provided to you by such EU data subject (this is in addition to the right to restricting processing and prior consent can be modified or taken away at EU data subject’s whim).
The GDPR requires consent as a basis for a company to transfer personal data. Prior to the GDPR, EU Directive 94/46/EC only required “opt out” consent, which could be implicit. The GDPR however, requires that the data subject agree to or make “a statement or clear affirmative action” granting such consent for use or transfer of personal data. Read more
So this is the question that is coming up more and more here in the United States – Does the GDPR apply to our company?
Remember that GDPR was put in place to protect individuals from improper use of their personal data and also to allow them to freely move same, and to enjoy certain other rights with respect to their personal data. While its reach is broad, the GDPR does not apply to processing of data if it falls outside the scope of EU law (processing for public safety, or government issues is not subject to it). If your company interacts with customers within the EU for purposes of trade, and you you store, process or share EU citizen’s personal data then the GDPR rules apply to your company. Read more
At the heart of it, the European Union’s new data privacy legislation, the General Data Protection Regulation (“GDPR”), restricts what the company’s that hold or manipulate personal data of individuals can do with it, and what type of consent is required for what acts. Like all regulations, there are a number of defined terms, which must be understood to grasp the coverage of the GDPR. In summary it covers a lot of activities that companies may not have thought would be regulated. Read more
We will be doing a number of posts on the European Union’s General Data Protection Regulation (“GDPR”) as it will be taking effect in May of 2018. Unlike its predecessor the GDPR is not a directive, but a regulation, meaning that all EU member countries have to comply with its explicit terms (unlike a directive which they are to incorporate into their domestic law). The GDPR applies to a lot of data, but only that which is “personal data” defined as “any information relating to an identified or indentifiable natural person (‘data subject’)”.
One of the important new aspects of the GDPR versus any European predecessor is that it defines the term “personal data breach”, and sets forth notification requirements to both the jurisdiction and the individuals that were/could be affected by the breach. Read more
So if you are a licensee of a software service or product, which you use internally or you sell (sub-license) to end users, you’ll want to be sure that there is no interruption in service for the term of the license provided you pay the license fees. Interruptions in access to the software can come in many forms, sometimes the licensor has issues with the software or its delivery (such as hosting provider’s downtime), and sometimes the licensor is acquired by a larger company that doesn’t pay as much attention to the particular software, or worse, the licensor has financial troubles and either ceases to operate as a going concern or files bankruptcy. You as a licensee, who needs the software to keep your operations steady or to keep your stream of revenue uninterrupted, will want to ensure that there is no break in the access to the software. Read more
We’ll be looking at the typical items addressed in a business to business software license agreement (as compared to an end user license agreement). The purpose of a software license between two companies are generally for the licensor, who has valuable software, to set forth how that software may be used by a licensee and the compensation and other items applicable to the licensee’s use. Read more
New York’s Department of Financial Services passed regulations which apply to virtual currencies, and require licensing of certain entities engaging in certain activities in connection with the state. It is referred to by the State as the “BitLicense”.
The State says that any individual or entity which is involved in the following is required to obtain a BitLicense:
- Virtual currency transmission
- Storing, holding, or maintaining custody or control of virtual currency on behalf of others
- Buying and selling virtual currency as a customer business
- Performing exchange services as a customer business
- Controlling, administering, or issuing a virtual currency.