It’s easy.  The First Article of the US Constitution directs Congress to make Bankruptcy laws.  Bankruptcy serves a simple purpose – to give “Relief” to Debtors burdened with overwhelming debt.  It is also simple in concept but the process is fraught with many pitfalls.

I’ll never get credit again. NO!  Chapter 7 – 10 years / Chapter 13 -7 years on your Credit Report.  But, who’s the better credit risk: a former bankrupt with no debt who can’t file again for 8 years or someone with debt overload?  Remember also, lenders only earn if they lend.  Plenty of folks get mortgages, car loans and other credit well within these time frames after bankruptcy.  Credit can be frighteningly easy to obtain even after bankruptcy … and here you go again.

STOP!! – Ask the real question, WHY DO I NEED CREDIT?!  Adjust your credit-based lifestyle.  Budget! Pay cash. Credit cards spend too easily.  Start paying attention.

I’ll lose my car, my house … everything. NO!   Most folks see no impact on their basic assets.  NYS “Exemptions” protect Homesteads ($82,995), automobiles ($4,550), tools ($3,400), jewelry ($1,150), most household items ($11,375) and many other assets from the claims of creditors in bankruptcy.  Retirement accounts are also generally excepted from the Bankruptcy process.  [Federal exemptions are similar but some are very different: Homestead $22,975 but a “wildcard” exemption is available for more flexible use].  If you have “non-exempt” assets, the bankruptcy trustee will be pleased to entertain an offer to release his claim beyond these statutory exemptions.  (more…)

Bankruptcy Missteps and Misconceptions

A cynic in my house once described a selfie as a portrait of a monkey taken by a jackass.  For those of you doing more productive things, like rearranging your sock drawer, you might have missed the case of the monkey selfie.  That case settled last fall but, on April 23, 2018, the U. S. Court of Appeals for the Ninth Circuit, nevertheless issued a decision in an appeal of the matter.  Naruto v Slater, 2018 WL 1902414 (9th Cir. 2018).   The monkey made out handsomely in the settlement, but did not fare well before the courts.  A brief recap is in order:

The monkey selfie case involved captivating photographs of monkeys taken by, well, a monkey.  British nature photographer, David Slater, in 2011, traveled to Sulawesi, Indonesia to photograph the endangered Celebes crested macaque (for purposes of his article, pronounced mon’· kee).  This was Slater’s fourth year traveling to photograph these monkeys and, on this trip, followed a group of monkeys for three days, “befriending” them by day two, reportedly becoming an accepted as a member of their troop.  Slater claims the monkeys were fascinated with his photographic equipment, playing with it and sometimes trying to run off with the camera.  (No word on whether there are monkey pawn shops in the middle of the Indonesian rain forest.)  The monkeys’ friendship apparently had its limits, Slater finding it challenging to get facial close-ups of his hairy brethren.  Appealing to their monkey vanity, Slater attached a wide angle lens to his camera, affixed it to a tripod, adjusted the settings so they would be optimized for close-ups and left the camera’s remote shutter trigger strategically nearby.  As Slater steadied the tripod, the monkeys approached, fascinated with the camera and gear, ogling the lens, while playing with the remote trigger and snapping many shots.  The photo session ended with a dominant male monkey bounding off Slater’s back, but not before creating a new category of selfie: a photo of a monkey taken by a monkey.  (more…)

Ninth Circuit Rules on the Case of the Monkey Selfie

As we patiently wait for warmer weather to catch up to last week’s official start of spring, many people are preparing to buy or sell a home. A recent article from housingwire.com notes that the annual jump in home sales starts in March and continues to climb throughout the spring and summer, with an estimated 40% of an average year’s total home-selling occurring in the months of May, June, July, and August.

This busy season is facilitated by a variety of internet tools. Listing sites like Zillow and Trulia make it possible for buyers to peruse thousands of homes on their smartphones, all while sitting on the couch. The digitization of municipal property records allows buyers to get detailed information about tax assessments, prior surveys, and soil composition. Locally, Ontario County’s ONCOR website is one of the best around.

For most people, buying a home is the single largest purchase they will ever make. The National Association of Realtors estimates that the median home value in Ontario County is $164,457. With mortgages that often last for thirty years, buying a home is a serious commitment, but also a good investment. For that reason here are five considerations to help home buyers navigate the real estate market. (more…)

Strategies for Home Buyers

As most surely know by now, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law on December 22, 2017 and became effective on January 1, 2018.  One of the most significant provisions of the Act for purposes of entity selection is its creation of a 20% deduction of “qualified business income” for owners of pass-through entities.  The deduction, which is codified at 26 USC § 199A, goes into effect for the 2018 tax year and is scheduled to expire at the end of the 2025 tax year, and applies regardless of whether the taxpayer itemizes deductions.  Pass-through entities are those organizations that do not pay any entity level corporate tax and instead pass income and loss through to its owners for tax purposes.  Pass-through entities include:  sole proprietorships; partnerships; limited liability companies taxed as partnerships, or as corporations with a subchapter S election; limited liability companies treated as disregarded entities; and subchapter S corporations.  Pass-through entities are the types of entities often used by small to medium size businesses, and many large businesses.  Income from real estate investment trusts (“REITs”) and publicly traded partnerships can also qualify for the deduction.

General Overview of Deduction:

First, some very general information on the new deduction.  The Act allows an owner of a pass-through entity to deduct on the owner’s tax return 20% of his or her “qualified business income” with respect to any qualified business or trade. [1]  Qualified business income, in turn, is defined, under Section 199A(c)(1) as “the net amount of qualified items of income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer,” essentially profit.

There are, however, some important limitations on the 20% deduction.  An owner of a trade or business that constitutes a “specified service trade or business” is only entitled to the full deduction if the owner’s taxable income is below a certain level, as discussed below.  The Act defines a “specified service trade or business” by incorporating the service businesses listed in Section 1202(e)(3)(A) of the Internal Revenue Code, with the exception of engineering and architecture.  The limitation therefore applies to owners of businesses providing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees.  This last category is one which, read broadly, could encompass numerous other types of service businesses not specifically listed.  The Act further includes within the definition of “specified service trade or business” any trade or business providing services that consist of “investing and investment management, trading, or dealing in securities, partnership interests, or commodities.” Section 199A(d)(2)(B).   (more…)

Impact of the New Tax Law’s Qualified Business Income Deduction on Pass-Through Entity Selection

One of the most important issues for a technology start-up company is ensuring that it is adequately securing and protecting its proprietary software code.

  1. Securing Your Software Rights

A start-up must first be sure that it has secured all rights in any software code that it considers proprietary.  The most important step to achieving this goal is to have written agreements with each person who is developing software for the company, particularly independent contractors, and that the agreements include terms that not only designate the software as work made for hire but also assign to the company all rights in the proprietary software.  Some background in copyright law demonstrates why an agreement containing those terms is essential.

Under copyright law, a work, including software code, is owned by the author of the work.  An employer is considered the author of the work if the work is a “work made for hire.”  A company’s rights in its software code may be relatively well protected when the software developer is an employee of the company because software code written by an employee within the scope of his or her employment constitutes work made for hire.  An employee for purposes of the work made for hire doctrine means an employee under the general common law of agency.[1]  An employer is the author, and therefore the owner, of the copyright in software code written by an employee within the scope of his or her employment under the federal copyright statute.[2]  (more…)

Securing and Protecting Software Code for Start-ups

Social media platforms like Facebook, Instagram, and Twitter allow us to communicate instantaneously with people around the world. With a few taps of a finger or thumb, we can share status updates, pictures, and political commentary with friends any time of day, wherever they may be. A 2017 report estimates that more than 5 billion people use a smart phone and more than 3 billion people use social media. By comparison, another report estimates that there are still 2.3 billion people without access to a toilet. Perhaps it says something about our collective priorities that there are more people with smart phones than toilets.

 

The prolific spread of social media has created some interesting challenges for our legal system. With so many people posting so much information, is any of it truly “private.” Even setting aside the threat posed by hackers, is a private post subject to discovery in litigation? This issue was recently addressed by the New York State Court of Appeals, the state’s highest court, in the case of Forman v. Henkin. A full copy of the Court’s February 13, 2018, decision can be found at www.nycourts.gov/ctapps/Decisions/2018/Feb18/1opn18-Decision.pdf.

In Forman, the plaintiff, Kelly Forman, sued the owner of a horse after she fell from the horse and suffered traumatic spinal and brain injuries. She alleged that she was left with cognitive deficits, memory loss, social isolation, and difficulties with written and oral communication. During her deposition she said that before the accident she used to post a lot of pictures of her active lifestyle on her Facebook account, but that she had deactivated the account about six months later because her injuries made it difficult for her to use a computer and compose coherent messages. Some of those posts were made to a “private” group of friends. The defendant’s lawyers requested that the plaintiff disclose all of her private Facebook posts, arguing that the posts would shed light on her activities both before and after the accident. When the plaintiff refused to disclose her private posts, the defendant filed a motion with the trial court to compel disclosure.

The trial court was faced with a somewhat novel issue. Does the general rule that all “material and necessary” information is subject to disclosure in litigation apply to private Facebook posts? The plaintiff argued that it does not apply. The defendant argued that it does. The trial court ruled in favor of the defendant, but imposed some modest restrictions on the disclosure. While the plaintiff was not required to produce the text of her private posts, she was required to produce all pictures that did not depict nudity or romantic encounters. On appeal, the Appellate Division reversed the decision of the trial court and held that private posts were afforded protection and that the defendant could only see pictures from the plaintiff’s private posts if the plaintiff elected to introduce them at trial.

When the issue finally reached the Court of Appeals, the Court sided with the initial decision of the trial court and held that there is no special protection for “private” posts. The Court of Appeals held that courts should apply established discovery rules and that “there is no need for a specialized or heightened factual predicate” when seeking the disclosure of private Facebook posts. When information in a Facebook post is “material and necessary” to the prosecution or defense of an action, it is subject to disclosure regardless of whether it is a public or private post. Social media may be a relatively new medium, but courts will not afford social media platforms any special protection. As noted by the Court of Appeals in Forman, “[w]hile Facebook – and sites like it – offer relatively new means of sharing information with others, there is nothing so novel about Facebook materials that precludes application of New York’s long-standing disclosure rules to resolve this dispute.”

The decision in Forman is an important reminder that there really is no such thing as a “private” post on social media once a court is involved. As social media use continues to grow and expand, the pull to post ever more about ourselves will grow as well. That impulse to share must be measured and balanced against the potential risk. While it may be cathartic to post a rant on social media about an employer, colleague, friend, or spouse who has wronged you, those rants will be discoverable if the dispute ever goes in front of a court.

The common proverb “discretion is the better part of valor,” which has Shakespearian and biblical roots, has served many well. In today’s modern age of social media, perhaps it should be modified to “discretion is the better part of posting.”

Terence Robinson is a Partner at Boylan Code LLP, a full service law firm with more than fifty legal professionals focused on serving you, the client. Offices are conveniently located in Canandaigua, Newark, and Rochester. This article is not legal advice.
Email: trobinson@boylancode.com

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Practice Discretion When Posting on Social Media