by Mat Sorensen | Jul 5, 2022 | Uncategorized
Many clients wonder whether they need to trademark their business name. A trademark is a legal protection given to a business name or slogan and allows the owner to prevent others from using the same name or slogan. The purpose of a trademark is to give the owner of the mark exclusive use of the name or slogan so as to distinguish itself from its competitors. Trademarks provide protections against counterfeits or cheats trading on a good business name (and cashing in on someone else’s marketing) and also allow a business to avoid having someone else operate under the same name which helps to avoid confusion amongst consumers.
For example, the business name “Google” is a trademark of Google, Inc. This trademark grants Google, Inc. the exclusive use of this name in their industry and prevents a competitor from simply opening up a website or business and offering products or services with the good “Google” name. This also protects consumers from doing business with someone they weren’t intending to do business with and also prevents other businesses from benefiting off of someone else’s marketing and brand recognition.
When deciding whether to trademark your business name or service you must first determine whether you want your name protected in the marketplace from use by others. An attorney operating as Mathew Sorensen Attorney at Law may not worry about someone operating under his business name and may see little benefit from a trademark. But a business named something like Paramount Real Estate Brokerage which conducts marketing under that name, maintains a website under that name, provides services under that name, and which employs many agents using that name would see much more benefit from a trademark. Trademark protection is done on a national basis so when your trademark is approved it grants national protection of your name or slogan. Those who use the name in violation of the trademark are in violation of law and can be sued by the owner of the mark for damages.
Key Trademark Considerations
When applying for a trademark keep in mind the following items.
1. Trademark Availability- Make sure nobody else has filed a trademark with your word/name. This can be searched at the uspto.gov website. Keep in mind that there can be similar names or marks in different industries (see point 3 below).
2. Trademark Must be Unique- The mark may not be merely descriptive. For example, you cannot expect to trademark the business name Boats, Inc. to sell boats as that is merely descriptive of what you do and doesn’t distinguish your business from others. A name like Eagle Boats, Inc. on the other hand is distinguishable since your use of the word Eagle in the industry could be unique.
3. Trademarks Are Granted by Industry/Class- A trademark is granted based on the industry your business is in (called class by USPTO). What this means is that your mark is protected in your area of business but is not protected across all businesses and product lines. For example, the word Paramount may be registered by one group in the USPTO entertainment class as Paramount Pictures but may be registered and owned by a totally different group as Paramount Real Estate in the USPTO real estate class. Keep in mind that your business may cross over into two classes and you may want the mark approved in more than one class.
4. Trademarks Must be In Use- The trademark must be in use in the economy (on a website, in a brochure) before the mark will be approved and this use must be shown to the USPTO with your filing. You can also state an intent to put the mark in commerce without actually doing it yet but then you need to go back to the USPTO to show the use later and this is much more of a hassle. It also costs more in fees.
5. Trademark Cost- The USPTO fee to do a trademark is $350 per class. Our fees at the law firm are $1,000 per mark for all the work, filings and consulting related to the mark.
6. Trademark Time Frame and Maintenance- It typically takes about 9 months on average to get approval of a trademark with the USPTO. After the mark is approved you can start using TM next to your name or slogan (if you desire). You also have to show continued use of the mark to the USPTO every 5 years or so to maintain the mark. If you fail to show continued use the mark expires and may be picked up by someone else.
Trademarks are a great way to build long-term protection of your business name or product/service. They are a necessity for many businesses that invest significant marketing dollars into their business name or products/services. If you want to learn more, please contact the law firm at 435-586-9366 to speak with one of the attorneys.
by Mat Sorensen | Jun 3, 2022 | Uncategorized
What do you do when you have a child you’d like to disinherit from your estate? It’s not as easy as you think, so make sure you follow the proper procedures to specifically cut them out. Don’t just leave their name out of things and think that this will accomplish your goals as the laws in most states will presume you intended to have them be an heir unless you specifically state otherwise. Your children, along with your spouse (if you have one), are the presumed heirs to your estate by law in the absence of an estate plan. As a result, it is important to complete an entire list of your children in the estate plan and to specifically mention any child who will not be an heir to your estate by stating something like, “it is the intention of the settlor (you) to disinherit the following child from the estate.” It’s that simple; just make clear writing indicating that you specifically intend them not to be an heir to your estate and they’re out.
If you have a problem child who you still want to provide for but want some strings attached, you can add a lot of excellent restrictions and controls to the estate through a well drafted trust. For example, you could state that the problem child can’t inherit their share of the estate if they have a drug or alcohol addiction. You could also be specific about something in their life. Say you had a child with legal issues or that has creditors chasing them down. You could state that the trust will only distribute once the child has resolved issues in their lawsuit or with creditors. Many trusts will have a spendthrift clause that addresses creditor issues for all heirs but you can also make it specific to an issue an heir may have that you want resolved before they inherit.
It is important to note that a trust (or will) cannot be created and enforced to go against public policy, promote illegal activities, and promote tortuous acts. One of the common problematic clauses is one which requires a child to divorce their spouse in order for them to receive their inheritance. For example, you can’t say, “Johnny doesn’t get anything from the estate so long as he is married to Susie”. Many courts view this as a violation of public policy as it promotes divorce. As a result, avoid clauses such as these and seek the guidance of an attorney when adding clauses which disinherit or significantly restrict a child’s inheritance.
If you completed your estate plan but now you’d like to disinherit a problem child from your estate, consider having a lawyer review your documents. Or, if you know you are in need of a new plan, visit our website to learn more about our Estate Planning Special or simply to set-up an appointment with an Attorney at www.kkoslawyers.com
by Mat Sorensen | Mar 1, 2022 | Uncategorized
Every buyer of a small business should consider the following three key legal issues when acquiring a business.
1. Buy Assets and Not Liabilities.
Most small business purchases are done as what are called “Asset Purchases”. In an Asset Purchase the buyer of the business acquires the assets of the business only. The assets include the goodwill, name, equipment, supplies, inventory, customers, etc. According to the terms of a properly drafted Asset Purchase Agreement, the assets do not include the prior owner’s business liabilities (the known or unknown). Under an Asset Purchase the buyer typically establishes a new company which will operate the business. This new company is free from the prior company’s liabilities and actions.
A “Stock Purchase” on the other hand occurs when the buyer acquires the stock or LLC units of the existing business. There are a few downsides to acquiring a business under a stock purchase. First, if you buy the stock or units of an existing company then you get the existing assets AND the existing liabilities of the acquired company. Since a new buyer hasn’t operated the business it is impossible for them to accurately quantify the existing liabilities. The second downside to a Stock Purchase is that the new owner of the company takes the current tax position of the departing owner when it comes to writing off equipment and other items in the company at the time of purchase. The downside to this is that the seller of the business may have already fully written off these items leaving the new business owner with little business assets to depreciate (despite a significant financial investment). If, on the other hand, the buyer acquired the “assets” in an Asset Purchase the buyer would depreciate and expense those assets as the new business owner chooses and in the most aggressive manner possible. Bottom line, an Asset Purchase has less liability risk and has better tax benefits that will allow the buyer to generate better tax write-offs and deductions over the life of the business.
2. Negotiate For Some Seller Financed Terms.
Many small business purchases include some form of seller financed terms whereby the seller agrees to be paid a portion of the purchase price over time via a promissory note. Seller financing terms are excellent for the buyer because they keep the seller interested and motivated in the buyer’s success since business failure typically means that the buyer wont be able to fully pay the seller. If the seller gets all of their money at closing then the seller is typically less interested in helping transition the business to the new owner as the seller has already been paid in full. Also, if the seller misrepresented something in the business during the sale that results in financial loss to the buyer, the buyer can offset the loss or costs incurred by amounts the buyer owes the seller on the note. In sum, the seller financed note gives the buyer some leverage to make sure the value in the business is properly and fairly transferred.
3. Conduct Adequate Due Diligence.
While it may go without saying that a buyer of a business should conduct adequate due diligence, you would be surprised at how many business purchases occur simply based on the statements or e-mails of a seller as opposed to actual tax returns or third party financials showing the financial condition of the business. A few due diligence items to consider are; get copies of the prior tax returns for the company, get copies of third party financials, make the seller complete a due diligence questionnaire where the seller represents the condition of the business to the buyer (similar to what you complete when you sell a house to someone). A lawyer with experience in business transactions can help significantly in conducting the due diligence and in drafting the final documents.
Buying an existing business is not only a significant financial commitment but is also a significant time commitment. Make sure the business is something worth your time and money before you sign. Oh, and make sure you get a well drafted set of purchase documents to sign.
by Mat Sorensen | Feb 28, 2022 | Entrepreneur, Uncategorized
Fro
m my article on Entrepreneur
The IRS recently announced that payment apps such as PayPal, Venmo, and CashApp will be required to issue 1099s to small businesses and self-employed persons. Here’s what you need to know.
New rule is targeted at very small businesses and individuals with a side hustle
Starting in tax year 2022, payment apps will be required to report to the IRS total payments received by a business account in excess of $600 annually. This new requirement is clearly targeted at the smallest of small businesses and at individuals with a side hustle, as the prior rule only required a payment app to report when an account received more than $20,000 and had 200 or more transactions within the year. These micro-businesses that collect less than $20,000 a year previously did not fall under the 1099 rule, but will now be treated like every other business, large or small…
Read the article on Entrepreneur here.
by Mat Sorensen | Jan 31, 2022 | Retirement & IRAs, Uncategorized
From my article on Cryptopedia
IRAs can own bitcoin and other cryptocurrencies. Crypto IRAs offer many advantages, the first and foremost reason being that the gains made on selling crypto with an IRA are generally not taxable. And if you have a Roth IRA, the profits come out entirely tax-free at retirement (age 59 ½). For traditional IRAs, the gains are tax-deferred, and owners are taxed as they draw funds out at retirement. These tax outcomes apply to Roth IRAs and Traditional IRAs when buying and selling stocks or mutual funds as well as crypto.
Read the article from Cryptopedia here.
by Mat Sorensen | Dec 3, 2021 | Real Estate & Alternative Asset Investing , Retirement & IRAs, Uncategorized
A recent Tax Court case, McNulty v. Commissioner, held that a self-directed IRA owners “…[personal] receipt of the AE [American Eagle] coins constituted taxable distributions equal to their purchase price.” In this case, Donna McNulty established a self-directed IRA and invested those IRA funds into an LLC where she was the manager. She then established a bank account for the LLC. The IRA funded this bank account with cash and then the LLC bank account was used to purchase precious metals. The precious metals were then subsequently shipped to and stored at Mrs. McNulty’s personal residence in her personal safe.
The IRS challenged Mrs. McNulty’s personal possession of the precious metals stating that personal possession violated IRC 408 and said that, “Mrs. McNulty’s receipt of the AE coins constituted taxable distributions equal to their purchase price.”
The IRS has been of the opinion, and we have long communicated to our clients, that home storage of precious metals via an IRA owned LLC violates the IRA rules under IRC 408. See the IRS Announcement and my article from 2016 on the subject, here. Some IRA custodians and non-licensed companies promoting precious metals IRAs have argued that you can have personal possession and can personally store specifically approved coins, such as American Eagle Gold Coins, by using an IRA/LLC structure (aka, checkbook IRA). This argument for specifically approved coins was based on some ambiguity in the law surrounding storage requirements for precious metals and IRAs in IRC 408(m). We’ve always believed IRA precious metals home storage was an aggressive strategy and one we advised against for the reasons the IRS and the Tax Court expressed in the McNulty case.
I have seen some providers of solo 401(k)s and other alternative strategies claim that, “checkbook IRAs are illegal.” This is great clickbait – but terrible content and advice as the court did not say that checkbook IRAs (aka, IRA/LLCs) are illegal. That was not part of their holding nor was it a part of the case from the IRS. The holding in the case was specific to a distribution of precious metals stored personally by the IRA/LLC owner. Please talk to your attorney, CPA, or licensed tax professional at to the details of the case and its impact on your IRAs investments. For our clients, our advice remains the same – don’t personally store your IRA or IRA/LLC precious metals at your home or in your personal possession.
The Court’s opinion can be found at the link below.
McNulty V Commissioner Precious Metals Storage and IRA owned LLC Checkbook IRA
Page 2 of 30«12345...102030...»Last »
