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What? Being a Delaware corporation doesn't let you avoid any state taxes. This is legally illiterate.

colechristensen 9y ago
https://www.theatlantic.com/business/archive/2016/10/dont-blame-delaware/502904/ https://www.theatlantic.com/business/archive/2016/10/dont-bl... >... it’s important to understand how the “Delaware loophole” works: A company sets up a subsidiary in Delaware, and transfers an intangible part of its business there—say, its trademark or naming rights. Then its other locations outside of Delaware pay money to the subsidiary in order to use that trademark. Since intangible assets are not taxed in Delaware, the company doesn’t have to pay taxes on the money that was transferred to the subsidiary. The company can deduct the cost of the royalties on its state returns in other states where it operates, and thus avoid a large share of the state income taxes it would have otherwise owed. It is the laws of states other than Delaware that allow this system to work.
- didgeoridoo 9y ago
  Setting up a sham subsidiary in Delaware and doing a tricky tax inversion is completely different from "incorporating in Delaware to avoid taxes." YC rightly recommends incorporating in Delaware because the state has a predictable structure of corporate law and courts that are expert in applying it. Implying that incorporation in Delaware is inherently some kind of tax dodge is bordering on slanderous.
  - colechristensen 9y ago
    Implying that not taking advantage of every legal avenue to minimizing tax burden while incorporated in Delaware is exercising your fiduciary duty to your investors is willful ignorance.
    - rxhernandez 9y ago
      Maybe there are other duties to other groups that are more important than your investors. I can't believe I even have to say that out loud. I can extend your fiduciary duty to uber easily insofar as them doing malicious things so long as the payoff was better than the legal costs. Hell I can extend this to certain evil pharmaceutical entities with little more additional effort. Your logic is either naive or you don't care about your fellow man. If it is the latter, I wish you your just deserts
      - sneak 9y ago
        To equate tax minimization with malice is ridiculous and you know it. Only the most brainwashed statists would think allowing public officials to piss away shareholder funds unnecessarily is virtuous.

https://www.theatlantic.com/business/archive/2016/10/dont-blame-delaware/502904/ https://www.theatlantic.com/business/archive/2016/10/dont-bl... >... it’s important to understand how the “Delaware loophole” works: A company sets up a subsidiary in Delaware, and transfers an intangible part of its business there—say, its trademark or naming rights. Then its other locations outside of Delaware pay money to the subsidiary in order to use that trademark. Since intangible assets are not taxed in Delaware, the company doesn’t have to pay taxes on the money that was transferred to the subsidiary. The company can deduct the cost of the royalties on its state returns in other states where it operates, and thus avoid a large share of the state income taxes it would have otherwise owed. It is the laws of states other than Delaware that allow this system to work.

didgeoridoo 9y ago
Setting up a sham subsidiary in Delaware and doing a tricky tax inversion is completely different from "incorporating in Delaware to avoid taxes." YC rightly recommends incorporating in Delaware because the state has a predictable structure of corporate law and courts that are expert in applying it. Implying that incorporation in Delaware is inherently some kind of tax dodge is bordering on slanderous.
- colechristensen 9y ago
  Implying that not taking advantage of every legal avenue to minimizing tax burden while incorporated in Delaware is exercising your fiduciary duty to your investors is willful ignorance.
  - rxhernandez 9y ago
    Maybe there are other duties to other groups that are more important than your investors. I can't believe I even have to say that out loud. I can extend your fiduciary duty to uber easily insofar as them doing malicious things so long as the payoff was better than the legal costs. Hell I can extend this to certain evil pharmaceutical entities with little more additional effort. Your logic is either naive or you don't care about your fellow man. If it is the latter, I wish you your just deserts
    - sneak 9y ago
      To equate tax minimization with malice is ridiculous and you know it. Only the most brainwashed statists would think allowing public officials to piss away shareholder funds unnecessarily is virtuous.