About the Course
Introduction
This CLE/CPE webinar will provide attorneys and tax professionals an in-depth analysis of the tax treatment and challenges of a simple agreement for future equity (SAFE) and convertible debt. The panel will discuss the typical structures of SAFEs and convertible debt, critical tax considerations for these transactions, navigating potential negative tax consequences for taxpayers, and the impact of Sections 1202 and 1045, Section 368, and other tax provisions.
Description
Convertible notes and SAFEs are common investment instruments used by startups and other businesses seeking to raise capital between priced financing rounds. However, the tax characterization of such instruments is not always clear, and the use of these instruments could have a negative tax result for certain investors in the absence of efficient tax planning.
Counsel representing emerging growth companies and their investors must carefully consider the tax implications of each financing mechanism to evaluate the preferred structure for a particular deal while also avoiding negative tax consequences.
Listen as our authoritative panel discusses the typical structures of SAFEs and convertible debt, key tax considerations for these transactions, navigating potential negative tax consequences for taxpayers, and the impact of Sections 1202 and 1045, Section 368, and other tax provisions.
Presented By
Mr. Karachale advises individuals and business entities on a broad range of tax planning and tax controversy matters. He has written extensively on QSBS issues. He counsels taxpayers on employee benefits and executive compensation issues, including deferred compensation and Section 409A. He assists clients with international tax compliance, including voluntary disclosures and related planning matters. He represents individuals and an array of business entities in controversy matters before the IRS and California state tax authorities.
Mr. Lebowitz advises clients on the tax-efficient planning and execution of a broad range of transactions, with a particular focus on the formation, operation and investing activities of private equity and hedge funds.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, June 26, 2025
- schedule
1:00 p.m. ET./10:00 a.m. PT
I. Overview of utilizing SAFEs and convertible debt
II. SAFEs: key terms and tax implications
A. Treatment for federal income tax purposes (Sections 1202 and 1045)
B. Tax treatment for purposes of Section 368
C. Tax treatment for purposes of Section 83
III. Convertible notes: key terms and tax implications
IV. Best practices and pitfalls to avoid
The panel will discuss these and other key issues:
- What are the typical terms of a SAFE?
- What are the tax implications for utilizing SAFEs?
- What are the tax implications of SAFEs under Sections 1202, 1045, 83, and 368?
- How does the tax treatment of a SAFE differ from a convertible debt instrument?
