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Income Tax Treatment of SAFEs and Convertible Debt: Navigating Sections 1202 and 1045, Section 368, Section 83

A live 90-minute premium CLE/CPE video webinar with interactive Q&A

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This program is included with the Strafford CPE+ Pass. Click for more information.
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Thursday, June 26, 2025

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, June 6, 2025

or call 1-800-926-7926
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This CLE/CPE webinar will provide attorneys and tax professionals an in-depth analysis of the tax treatment and challenges of a simple agreement for future equity (SAFE) and convertible debt. The panel will discuss the typical structures of SAFEs and convertible debt, critical tax considerations for these transactions, navigating potential negative tax consequences for taxpayers, and the impact of Sections 1202 and 1045, Section 368, and other tax provisions.

Description

Convertible notes and SAFEs are common investment instruments used by startups and other businesses seeking to raise capital between priced financing rounds. However, the tax characterization of such instruments is not always clear, and the use of these instruments could have a negative tax result for certain investors in the absence of efficient tax planning.

Counsel representing emerging growth companies and their investors must carefully consider the tax implications of each financing mechanism to evaluate the preferred structure for a particular deal while also avoiding negative tax consequences.

Listen as our authoritative panel discusses the typical structures of SAFEs and convertible debt, key tax considerations for these transactions, navigating potential negative tax consequences for taxpayers, and the impact of Sections 1202 and 1045, Section 368, and other tax provisions.

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Outline

  1. Overview of utilizing SAFEs and convertible debt
  2. SAFEs: key terms and tax implications
    1. Treatment for federal income tax purposes (Sections 1202 and 1045)
    2. Tax treatment for purposes of Section 368
    3. Tax treatment for purposes of Section 83
  3. Convertible notes: key terms and tax implications
  4. Best practices and pitfalls to avoid

Benefits

The panel will discuss these and other key issues:

  • What are the typical terms of a SAFE?
  • What are the tax implications for utilizing SAFEs?
  • What are the tax implications of SAFEs under Sections 1202, 1045, 83, and 368?
  • How does the tax treatment of a SAFE differ from a convertible debt instrument?

Faculty

Karachale, Christopher A.
Christopher A. Karachale
Partner
Hanson Bridgett

Mr. Karachale advises individuals and business entities on a broad range of tax planning and tax controversy matters....  |  Read More

Lebowitz, Seth
Seth Lebowitz
Partner
Sadis & Goldberg

Mr. Lebowitz advises clients on the tax-efficient planning and execution of a broad range of transactions, with a...  |  Read More

Attend on June 26

Early Discount (through 06/06/25)

See NASBA details.

Cannot Attend June 26?

Early Discount (through 06/06/25)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. CPE credit is not available on recordings. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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CLE On-Demand Video