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Full-Text Articles in Law
Standing On The Shoulders Of Llcs: The Tax Entity Status And Decentralized Autonomous Organizations, Samuel D. Brunson
Standing On The Shoulders Of Llcs: The Tax Entity Status And Decentralized Autonomous Organizations, Samuel D. Brunson
Faculty Publications & Other Works
Since the formation of the first decentralized autonomous organization (DAO) in 2016, their use has exploded. Thousands of DAOs now try to take advantage of smart contracts to solve a problem that plagues business entities: the gulf between ownership and management. Armed with smart contracts and requiring token-holders to vote on any change in strategy, DAOs dispense with the management layer so necessary in traditional business entities. DAOs owe their existence to technology. Without blockchain, without cryptocurrency, and without smart contracts, there would be no DAOs. But they owe their explosiveness to something much more unexpected: Treasury regulations. In the …
A Critical Evaluation Of The Qualified Small Business Stock Exclusion, Gregg Polsky, Ethan Yale
A Critical Evaluation Of The Qualified Small Business Stock Exclusion, Gregg Polsky, Ethan Yale
Scholarly Works
Section 1202 of the Internal Revenue Code grants a gain exclusion to certain shareholders who own "qualified small business stock." We describe the tortured history of this rule, explain how it works (and fails to work), and critically evaluate whether the rule serves any coherent policy objective. If Congress keeps the rule in place, significant revisions are necessary to align the rule with sound policy and tamp out the abusive manipulations arguably permitted by the law in its present form. We propose several improvements along these lines. We also make the case for eliminating the exclusion in its entirety.