Business Law

New Unisex Bathroom Requirements Effective March 1

Beginning March 1, 2017, all single-user restroom facilities in California businesses, public accommodations, and state and local government agencies, must be designated as all-gender facilities, accessible to all people, regardless of gender. “Single-user toilet facilities” include all bathrooms that contain, at the most, one toilet and one urinal, and a lock that is controlled by the user.

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Ouch!! Federal Court Holds That Marijuana Dispensary May Not Deduct Business Expenses When Determining its Income for Income Tax Purposes

In Olive v. Commissioner of Internal Revenue 792 F. 3d 1146 (7/9/15), the Ninth Circuit recently upheld the decision of the U.S. Tax Court which precluded a marijuana dispensary from deducting any ordinary or necessary business expenses when determining its income for income tax purposes. 
 

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Elder Abuse Claims in Transactions

As our population ages, it is only natural there are more transactions where one of the parties is a senior citizen.  Parties to a transaction need to remember that the Elder Abuse Dependent Adult Civil Protection Act (EADACPA) applies to transactions with seniors.
If it is believed that an elder has been taken advantage of in a transaction, it may lead to an elder abuse complaint being brought on behalf of the senior.  

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The Phantom Income Issue

When starting a new business, the question that every new venture faces is how to fund the operations of the business. Often times, one person agrees to contribute money, while the other person agrees to contribute services. This can lead to an issue known as “phantom income.”  Presently, the tax code places a value on capital contributed to a business, but not labor or “sweat equity” (the future services a partner in the business will perform for the business).

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Incontestable Trademarks

Federal trademark registration provides certain protections to businesses and other registrants who use and own trademarks and service marks to promote their goods and services. These protections are strengthened when a trademark becomes “incontestable” five years after its registration. Once a mark becomes incontestable, its validity cannot be challenged on a variety of grounds which often haunt other marks not deemed incontestable. Incontestable marks are immune to certain challenges, including that the mark is primarily merely descriptive and that it lacks secondary meaning.

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Land Use Law - Judge Twice?

With the ongoing drought and the endless debate over responsible development, land use law is a fertile field of confusion, controversy, and contempt. Municipalities, counties, community services districts, and the state each have their own set of rules and regulations, and navigating the myriad laws can be the bane of anyone taking on a development project or petitioning a city or county for a special use permit.

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CA Requires Training to Prevent Abusive Conduct

California’s law that requires employers to provide annual sexual harassment training to all supervisors was amended to include prevention of abusive conduct. The new law defines abusive conduct as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.

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The CIDER Act “Presses” Onward

The United States House of Representatives has decided to turn cider into (sparkling) wine. The reason for this near miraculous action: taxes. Presently, “hard cider” is defined as “a still wine derived primarily from apples or apple concentrate and water, containing no other fruit product, and containing at least one-half of 1 percent and less than 7 percent alcohol by volume.” Hard cider is taxed at 22.6 cents per wine gallon. 26 U.S.C. §5401.

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Authorship, Monkeys, and Copyright Law

Who owns the copyright to an image or other work of art enabled by a human but created by an animal? Answering this seemingly obscure question recently became a pressing matter to British wildlife photographer David J. Slater. In 2011, Slater traveled to Indonesia where he photographed crested black macaques. While he was in the field, the curious macaque snatched his camera and took hundreds of photos. While many were blurry, the monkey’s photo shoot produced several outstanding images that went viral on the internet. Wikimedia Commons, a U.S.

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Electing S-Corporation Status

A very important financial decision for Humboldt County corporations is whether to elect federal income tax treatment under IRC subchapter S.  S-Corporation treatment is similar (but not identical) to partnership treatment. All the corporation’s shareholders are bound by an election into a S-Corporation.  A S election has the effect of making the corporation a pass-through entity for federal and California tax purposes, but it does not change the nature of the business as a corporation for state corporate law purposes.

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Mileage Reimbursement Rate Changed 1/1/13

The Internal Revenue Service recently issued the 2013 optional standard mileage rates, which are often used by employers to reimburse employees for using employees’ automobiles for business purposes.

Beginning January 1, 2013, the standard mileage rates for the use of an auto will be (1) 56.5 cents per mile for business miles driven, (2) 24 cents per mile driven for medical or moving purposes, and (3) 14 cents per mile driven in service of charitable organizations.  The business miles driven rate increases during 2013 by 1 cent from the 2012 rate.

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LLC Taxes - "Check the Box" Regulations

For Federal tax purposes, the Internal Revenue Service has formulated “check-the-box” regulations for classifying business organizations. This allows unincorporated businesses to choose to be taxed as either a corporation, a sole proprietorship or a partnership. These “check-the-box” regulations have replaced the previous tests which tried to determine whether a business had a majority of corporate characteristics which would require it to be taxed as a corporation. If it did not have enough corporate characteristics, it would be taxed as a partnership.

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California Lawsuits - Suspended Companies

A California Corporation or Limited Liability Company (“LLC”) can be suspended for a number of reasons, including the nonpayment of taxes under California Revenue and Taxation Code or for their failure to file updated information under the Corporations Code.

When a corporation or LLC is suspended, it loses its rights and privileges under California law.  Thus, the company cannot legally operate until revived (reinstated) with the Secretary of State.

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Trade Secrets

If you are a business in the Humboldt, Del Norte, Mendocino area, do you have trade secrets and, if so, do you know how to protect them?

The Uniform Trade Secrets Act (UTSA) governs claims of trade secrets misappropriation.

According to the UTSA, a trade secret is:

Information, including a formula, pattern, compilation, program, devise, method, technique or process that:

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Cloud Computing Considerations

Cloud computing is rapidly gaining ground in today’s workplace, offering on-demand storage capacity, software advantages, and related IT department and capital expenditure savings.  The transition to cloud computing, however, comes with a healthy dose of potential hazards. Awareness of these potential pitfalls is essential for companies considering cloud computing and various providers.

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AFR Rates and Beneficiary Business Purchases

The Applicable Federal Rate (AFR) is a rate published monthly by the IRS for federal income tax purposes.

The IRS will treat any “loan” with a below market interest rate (below the AFR) as a gift of the foregone interest from the lender to the borrower.  The amount of the foregone interest will be treated as though it was transferred from the lender to the borrower as a gift and retransferred from the borrower to lender as income on the last day of the calendar year.

How may this apply to the purchase of your Humboldt County business by your beneficiaries?

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California Law Now Permits Benefit Corporations

At the turn of the new year, many laws approved by the California legislature during 2011 went into effect.  One such law is AB 361, which created the benefit corporation, a business entity new to California.  Beginning January 1, 2012, new entities may adopt this form, and existing corporations may convert to benefit corporations with a two-thirds shareholder approval vote.

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Business Succession Planning in Humboldt County

Do you own a family business in Humboldt County?   Be it in Eureka, Arcata or Southern Humboldt, succession planning for a family business raises a number of issues.

You should plan for the succession to your business over a long period.   Primary concerns include determining your children’s interest in the business and their ability to run a business.

You may want to transfer an interest in the business during your lifetime.  This strategy may be particularly useful if you believe your business is substantially undervalued at the time of your transfer.

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Copyright Cautions

Many non-profit groups and organizations publish regular newsletters or maintain internet blogs and websites to keep in touch with their members and draw support from the public. The huge number of images readily available through internet search engines has made finding just the right image to accompany such articles on even the most obscure subjects a breeze.

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Tradenames - New Business or New Products

When starting a new business or launching a new product, one of the many components that requires special consideration is selecting a name for the business or product.  In addition to the marketing considerations and personal preferences that weigh heavy in choosing a name, business people should also consider statutory requirements and the intellectual property rights of themselves and others when choosing a name.

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Advantages of a Family Owned Business

When business and estate planning professionals discuss family businesses, discussions usually center on the challenges faced by the typical family business.  In addition to the estate tax and income tax considerations, determining who should succeed to the ownership and management of the business, and when that succession should occur, we are also often discussing the potential for family conflicts within the business.

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Federal Tax Information

While concentrating on the uncertainty about estate tax thresholds for 2011, most Humboldt County residents have overlooked the income tax ramifications of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

This legislation gave tax payers a 2-year income tax reprieve by extending into 2011 and 2012 the lower income tax rates and many of the other tax incentives that were enacted in 2001 and 2003. These were commonly called the Bush Tax Cuts.

In 2013:

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Sale/Purchase of Business in Humboldt

If you are considering purchasing a business or selling a business in Humboldt County, there are a number of important questions that should be considered before you enter into the transaction:

1.         What is the price and how was the price determined?  Is the price based on the seller’s opinion?  Is the price based on the opinion of a business valuation expert or accountant, and, if not,  should one be hired or consulted regarding the sales price?

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Credit Card Basics

In the face of rising credit and debit card use nationwide, the Janssen Law Firm hopes to inform small businesses in Humboldt County and elsewhere to make the best decisions for their growth.   Whether or not to accept plastic forms of payment involves knowing the parameters of what can and cannot be done in compliance with the law and merchant contracts.   Since small businesses have little to no bargaining power in the contracts they must sign to accept cards, they should at least familiarize themselves with the rules (for an illustration of the rising use of credit and debit cards, see 

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Legal/Tax Issues in Short Sales/Foreclosures

Lately, much has been written and talked about in the news regarding real property short sales and foreclosures.  Federal and state law have also been changing in an attempt to assist homeowners who find themselves "under water" and burdened with excessive mortgage debt.  When faced with a foreclosure, a homeowner has various options and may be assisted by advice from an attorney.

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Get it in Writing

If you want an agreement to be enforceable, get it in writing.  Of course, coming from an attorney, you probably expect that advice.  However this little pearl of wisdom would not be repeated so often if it weren’t useful.  Legally, promises or agreements that you exchange with another are classified as contracts and certain types of contracts can be unenforceable if they are not in writing.  This principle is known as the Statute of Frauds and prevents one from simply inventing agreements or terms that were never actually agreed upon.  Sterling v. Taylor, 40 Cal.

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Forms of Business Organization

If you are an entrepreneur who wishes to start up a business in Humboldt County, one of the first questions you will face is what form of business organization should you choose for your business endeavor:

Traditionally, there have been three major forms used to structure a business enterprise:

1)  the sole proprietorship;

2)  the partnership, including the limited partnership; and

3)  the corporation.

Recently, two other business forms have come into widespread use – the limited liability company and the limited liability partnership.

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