Practical legal guidance on QSBS (Section 1202), equity compensation, startup formation, financing, and Washington State tax issues for founders, investors, and startup employees.
Deferred founder salary is a two-headed trap: personal liability for double damages under Washington's wage statutes, and a 20% Section 409A penalty on the recipient. Here's how to structure pay correctly.
FinCEN's final rule, effective August 14, 2026, permanently ends beneficial ownership (BOI) reporting for U.S. companies and U.S. persons under the Corporate Transparency Act — and FinCEN will delete previously reported U.S. person data.
Missing certificates don't hurt QSBS — but a missing issuance does. No signed SPA, no board consent, no payment can move your §1202 holding period and gross assets test years later than you think. Usually fixable; fix it before diligence.
Washington allocates gains on stock by domicile, but gains on art, jewelry, and collector cars by residency and property location. Domicile is irrelevant under RCW 82.87.100(1)(a) - which makes the 30-day safe harbor a statutory shield for a collection sale, not just evidence.
Seattle layers two payroll taxes on employers in 2026: the JumpStart tax (0.746%–2.557% above a $9.07M payroll threshold) and a 5% tax on compensation above $1M with no threshold at all. Options are out, RSUs are in, and the sourcing rules for hybrid work are the planning lever.
Rule 701 lets private companies grant equity compensation without SEC registration — if the recipients qualify and the rolling 12-month math holds. The complete guide, updated for the SEC's March 2026 guidance.
ESSB 6346 strips capital gains from the income tax base, adds back the Washington-taxed gain, and credits the capital gains tax paid. Your gain bears the greater of the two regimes — and for high earners, that means 9.9%, not 7%.
S corporation shares never qualify as QSBS. Two routes can still move future appreciation into a QSBS-eligible C corporation.
