Many companies are already using AI without fully realizing it. It is embedded in software platforms, marketing tools, HR systems, analytics programs, and customer-facing applications. Even when a business does not build the AI itself, it remains responsible for how that AI operates, what data it uses, and what outputs it produces. If an AI system makes a mistake, discloses confidential data, or produces misleading or discriminatory results, the legal and financial consequences fall on the company.

AI & Data Privacy Are Now Inseparable

Modern AI systems rely on large volumes of data, much of which is personal, financial, or proprietary. That means existing privacy and data-protection laws already apply to AI, even where no AI-specific statute exists. Consent, notice, purpose limitation, data minimization, and security obligations all matter just as much when data is processed by an algorithm as when it is processed by a human.

Regulators increasingly view AI as an extension of data processing, not a separate category. When personal data is fed into an AI system, whether for training, analysis, decision-making, or otherwise, privacy obligations follow it. Companies that do not understand how data moves into and through their AI tools are exposed to compliance risk, whether they realize it or not.

AI Governance Is Becoming a Business Expectation

Across industries, regulators and counterparties are beginning to expect companies to know when and how AI is used in their operations. That includes having internal policies, employee guidance, vendor controls, and documentation that demonstrate responsible use.

This is not just about compliance. It is also about risk management. Without clear rules, employees may upload confidential information into public AI tools, rely on unverified outputs for business decisions, or use AI in ways that conflict with company values or legal obligations. Governance provides guardrails so innovation does not quietly turn into liability.

AI Raises Intellectual Property & Contract Issues

AI systems can generate reports, marketing materials, designs, code, and other business content, but ownership of that generated content is not always straightforward. Some platforms impose limits on how their outputs can be used. Others rely on training data that may include copyrighted or proprietary material, which can create infringement risk.

Businesses that rely heavily on AI-generated content need to understand what rights they actually have, what their vendors are promising, and where potential risk exposure exists. These issues belong in contracts, licensing terms, and internal usage policies, not just in the IT department.

Errors, Hallucinations, & Accountability

AI systems are powerful, but they are not reliable in the way traditional software is. They can generate incorrect or fabricated information that appears convincing. If those outputs are used in customer communications, advertising, financial reporting, or operational decisions, the company bears the risk. There is no legal concept of “the AI made me do it.” The business remains responsible for what it publishes, relies on, or communicates, even when it was created by an AI tool.

Using AI Responsibly Is Now Part of Running a Business

AI is here to stay. The companies that succeed with AI are not the ones avoiding it, they are the ones using it deliberately, with clear rules, strong data protections, and realistic expectations about what it can and cannot do. The challenge for businesses is learning how to use it in a way that supports growth while protecting the organization from legal, regulatory, and reputational harm. Balancing innovation with accountability in a rapidly evolving environment is key to success in the world of AI.

How We Can Help

If you have questions about how artificial intelligence is being used in your business, whether your current practices create risk, or how to put appropriate policies and contracts in place, now is the time to address them. AI is moving faster than the law, but regulators are paying close attention, and the law may soon be able to catch up. Working with counsel to evaluate and structure your AI use can help you stay ahead of problems rather than reacting to them after they arise.

For more information or to seek counsel from our Business & Corporate practice group, please reach out to request a consultation or call us at 216-696-1422.

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This information is provided for general informational purposes only and should not be construed as legal advice. Readers should consult with qualified legal counsel regarding their specific circumstances before taking any action based on the information presented.

The post Businesses & Artificial Intelligence: Avoiding Hidden Risks appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Facts

Crown C Supply is a closely held corporation owned by two brothers, Michael and Thomas Connelly. Michael owned 77% of the shares, while Thomas owned 23% of the shares. In 2001, the brothers, desiring to maintain control over the corporation in the event either brother died, entered a “redemption” buy-sell arrangement funded with life insurance policies to redeem either owner. The buy-sell agreement granted either brother a right of first refusal in the event the other died, but the failure to exercise this right created an obligation on Crown C Supply to purchase the decedent’s shares. Crown C Supply acquired two life insurance policies, one on the life of each brother to fund the purchase of shares of a deceased shareholder. While the buy-sell agreement provided an appraisal mechanism to value the corporation’s shares at either shareholder’s death, the parties did not follow the terms of the agreement.  Thomas, on behalf of the corporation and also in his capacity as fiduciary of Michael’s estate, agreed on a price of $3 million for Michael’s shares, which was less than the $3.5 million of life insurance proceeds the corporation received.

Michael died in 2013, and under the buy-sell agreement, Thomas declined to exercise his right to buy Michael’s shares, triggering Crown C’s obligation to purchase the shares. The redemption price was to be based on an outside appraisal. Rather than securing the appraisal, Michael’s son and Thomas agreed that the value of Michael’s shares was $3 million. Crown C then used $3 million of the $3.5 million of insurance proceeds to purchase the deceased brother’s shares. Thomas, as executor of Michael’s estate, filed an estate tax return valuing the shares at $3 million.

The IRS challenged the estate’s $3 million valuation of Michael’s shares. The IRS’ position was that the life insurance policies were a corporate asset that increased Crown C Supply’s value prior to the redemption. Connelly’s position was that the buy-sell agreement created an offsetting obligation to purchase the estate’s shares, a net neutral, where the receipt of the life insurance proceeds would be offset by the corresponding obligation. Both the Eastern District of Missouri and 8th Circuit Court of Appeals agreed with the IRS that the life insurance proceeds increased Crown C Supply’s value prior to redemption. The Connellys filed and were granted certiorari by the Supreme Court.

Court’s Decision and Reasoning

The Court framed the issue presented as one of valuation: is life insurance that funds a buy-sell Agreement a corporate asset? Unanimously, the Court said yes. The Court reached this conclusion by reasoning that the redemption was not a liability that reduced corporate value. The Court held that life insurance was a corporate asset since no willing buyer or willing seller would pay a depressed value when Crown C Supply had an influx of cash from life insurance proceeds. Therefore, because the life insurance proceeds were payable to the corporation, the Court held that life insurance proceeds were a corporate asset that increased the corporation value of Crown C Supply.

Consequences of Connelly

It is very common in closely held corporations in order to provide for orderly succession to plan for the death of a shareholder to maintain control within a family or those who are active in the business.  The parties together with the corporation typically enter into a buy/sell agreement to address that contingency with many cases as in Connelly the corporation being obligated to purchase the deceased’s shares through a redemption buy/sell agreement to avoid economic hardship including sale of the businesses or critical operating assets to fund that obligation, life insurance is used as a funding mechanism to address the obligation.

Connelly raises two key issues with life insurance funded by buy/sell agreements: corporations with existing life insurance arrangements, and prospective planning. First, all buy/sell agreements should be reviewed.  Before taking any precipitous action consider if the current agreement is appropriate and if not consider the consequences of the buy/sell agreement.  For example, if businesses transfer life insurance policies, the transfer for value rules may apply to curtail the tax-free receipt of life insurance proceeds. Future arrangements involving life insurance could include a cross-purchase arrangement, or potentially a special purpose life insurance LLC. All these options for existing and future arrangements require intricate planning. Further, while Connelly may seem to have the biggest impact on life insurance funded redemption agreements with individuals who have taxable estates, all closely held businesses with life insurance funded redemption agreements are affected by Connelly.

Consulting with experienced tax and estate planning attorneys will assist you in the development of an effective strategy if life insurance is anticipated to be a funding mechanism in the purchase of a deceased owner’s shares. If you have questions on the implications of Connelly for your business, please reach out to request a consultation with our Wealth Management Team or call us at 216-696-1422.

The post Status of Life Insurance Funded Buy/Sell Agreements After Connelly? appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Take Inventory of Business Contracts & Review the Fine Print

Compile a comprehensive list of all your business contracts. This includes leases, vendor agreements, client contracts, employment agreements, and other legal documents. Organize them and keep them in a centralized location so they are easy to access for future reference. Check the expiration dates of each contract to identify any that are nearing renewal or termination. To avoid any disruptions in service or legal troubles, be sure to prioritize contracts that are close to their expiration.

Review the fine print of your service agreements to refresh your knowledge of service offerings, deliverables, and hidden fees. Staying up to date on this information will help mitigate unfavorable surprises down the line that could negatively impact your business.

Assess Contract Performance & Identify Risks

Evaluate the performance of each contract to determine if the terms continue to align with your business objectives. Consider elements such as pricing, deliverables, service quality, and any changes in your business needs since the contract was first established.

Identify potential risks linked to each contract, such as ambiguous language, insufficient protections, or failure to comply with regulatory standards. Proactively addressing these risks can significantly reduce the likelihood of encountering future legal issues. Additionally, it’s crucial to confirm that your contracts continue to effectively serve your business and contribute to its seamless operation.

Negotiate Contract Updates & Document Changes

Contact the other parties involved in the contracts to discuss any necessary updates or revisions. This could include renegotiating pricing terms, updating the scope of work, clarifying ambiguities, or adding provisions to address new risks or business needs. On the other hand, this could include terminating a contract if it no longer serves the best interests of the business.

Seek Legal Counsel for Contract Review

Consult with your attorney to review all proposed changes or updates to your contracts. Their legal expertise can offer invaluable insights to refine and enhance your contractual arrangements. Your attorney can also verify that your contracts are in compliance with relevant laws and regulations.

Monitor Contract Compliance

Finally, consider establishing and implementing a formal process to monitor ongoing contract compliance throughout the year. Consistently reviewing contract performance, tracking key performance indicators, and promptly addressing any deviations from agreed-upon terms can support smooth business operations and risk avoidance.

By setting aside the time to review your business contracts this spring, you can help protect your business, streamline operations, and set the stage for future success. With careful planning and attention to detail, you can ensure that your contracts continue to support the goals and objectives of your business.

To seek counsel from our Business & Corporate attorneys, please reach out to request a consultation or call us at 216-696-1422.

The post Spring Clean Your Business Contracts appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Business and nonbusiness income are important concepts in Ohio tax law. Business income refers to the apportionable income among states where the taxpayer’s business is conducted, and it is generated from the business’ operations. Ohio nonbusiness income refers to the earnings allocated to the business’ state of domicile which is generally produced outside of normal business operations. Ohio law favorably taxes business income at a flat 3% and provides for a business income deduction. These tax treatments are not available to nonbusiness income.

Previously, the Ohio Department of Taxation’s position was that the sale of a business interest did not qualify as business income, subject to the favorable flat tax rate and business income deduction, despite the statutory definition of business income including proceeds from a liquidation of a business interest. Taxpayers that claimed business sales’ proceeds as business income, along with claiming the corresponding deduction, were challenged by the Department of Taxation, sometimes resulting in litigation.

To help resolve the disputed interpretations of liquidation proceeds and sales proceeds, HB 515 now provides two scenarios in which income from the sale of an equity interest in a business definitively constitutes business income eligible for the corresponding deduction: (i) if the equity sale is treated as an asset sale for federal income tax purposes (for example, an Internal Revenue Code §338(h)(10) election was made); or (ii) if the seller materially participated in the business activities during the year in which the business is sold, or in any of the five years preceding the sale. Satisfying either of these scenarios will enable the taxpayer to claim the business sales proceeds as business income in Ohio.

It is important to note that legislation is intended to be remedial, such that it will apply to petitions for reassessment, refund applications, and appeals pending on or after HB 515’s effective date, as well as to any sales transaction that is subject to audit on or after HB 515’s effective date.

If you are contemplating the sale of an Ohio business, we welcome the opportunity to speak with you and discuss the impact of HB 515 on your potential transaction, as well as how McCarthy Lebit’s Mergers & Acquisitions team can further assist you with a successful transaction.

Please reach out to request a consultation or call us at 216-696-1422.

The post New Ohio Tax Law Regarding the Sale of Business Interests appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

A term sheet typically covers structural, financial, process, and legal matters such as:

• Deal Structure – Asset vs. Equity
• Purchase Price and Terms of Payment – Amount, Deferred Payment, Seller Financing
• Assumption and/or Exclusion of Liabilities – Payables or other obligations
• Due Diligence – Scope and Process
• Timing – Schedule of Events, from signing to closing
• Closing Requirements – Conditions Precedent, required approvals and consents
• Employment Matters – Retention or Termination, of owner and/or other key employees
• Post-Closing Considerations – Working Capital Adjustment and Business Transition Matters

The term sheet provides a road map for the parties as well as their counsel and advisors moving forward through this process. It will form the basis for drafting definitive documentation. If the parties disagree on certain terms, they will look back to the term sheet for guidance. This will help alleviate potential misunderstandings or sources of conflict.

That is not say that the term sheet is written in stone. Situations change during the course of due diligence and re-negotiation may be necessary in those instances. In such a case, it is appropriate to revisit the term sheet and revise accordingly. Absent such circumstances, however, it is considered bad form to re-trade terms previously agreed-upon in the term sheet as it may sour the relationship between buyer and seller or even derail the transaction.

While most terms are non-binding, there are certain provisions which are binding upon the parties such as:

• Exclusivity – Buyer has the exclusive right to consummate a transaction for a set period of time
• Confidentiality – Agreement not to disclose confidential information
• Non-Solicitation – Seller will not seek or entertain other offers
• Governing Law – Which State law governs with respect to interpretation of the letter of intent

The term sheet is the critical first step for a transaction and will set the path going forward. Before signing, a seller should consult with counsel and financial/strategic advisors to confirm that it accurately reflects their understanding of the pending transaction and properly accounts for all the material deal points.

For assistance reviewing your term sheet, please reach out to request a consultation or visit Mike’s bio for his contact information to reach out to him directly.

The post What to Know Before Signing a M&A Term Sheet appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

When determining whether to fight or whether to settle, several key components must be factored before making a final decision. The value of the claim must be weighed, insurance policies must be reviewed, the potential for bad press should be investigated – all the above are areas to consider before determining how to proceed. Litigation Principal Tracy Francis shares her insight about how she counsels her clients in ‘fight or settle’ situations.

Know Your Client & Their Objectives

It is vital to know your client, what they want, and what they don’t want. Is this a make it or break it situation? Anticipate how the claim will look in the press. Is the press associated with fighting worth the result? Understand insurance policies fully. What is their coverage limit?

Take a Realistic Approach

In proceeding with litigation, will a judgement ever be able to be collected? You don’t want to throw good money after bad and pursue something that you’re not going to get anything from. The cost benefit of proceeding with litigation must be closely reviewed. Is proceeding going to be a cost on your employees and company morale?

Consider Potential Counter Claims & Prepare Accordingly

When determining next steps, you must prepare for possible outcomes of either avenue you decide to take. If you decide to proceed with litigation, what are potential counter claims that can come from the other side in retaliation? Will those counter claims hurt you? How can the potential counters be embraced and how will you act in their presence? If you decide to settle, will that be enough?

Understanding the client, their business, and the claim is necessary to evaluate the current situation and to successfully plan for potential future outcomes. In doing all these things, you are better able to determine how well you are set up to fight or if you are better off settling.

If you’re unsure if you should proceed with litigation or if you should seek settlement, please reach out to request a consultation or visit Tracy’s bio for her contact information to reach out to her directly.

The post Risk Mitigation & Litigation Avoidance: Part 3 appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Understanding the importance in establishing best practices in your business is the first step in avoiding litigation and mitigating risk. Implementing those business practices comes next. Litigation Principal Tracy Francis suggests some key practices that should be implemented in your business.

Learn From Mistakes

If something has been a problem before, don’t let history repeat itself. Sometimes a company just needs to take a step back and take a hard look at itself and examine its culture as a business to make sure there are no red flags, and if there are red flags, proactively do something about it.

Company Compliance Check

Make sure you are following the law. This doesn’t just mean don’t harass people or don’t discriminate against people. Make sure your company is compliant with wage and hour laws, OSHA, HIPPA, and other regulations where you can face legal trouble if non-compliant.

Documentation

When you are working with people it is key to document everything, such as:

• Incidents or Issues. Include employee’s responses and all follow up taken. This ensures you have record of the situation, all correspondence, and all internal steps taken to address and/or resolve the matter.
• Performance Reviews. Document performance reviews and include honest feedback. In the event an employer wants to terminate an employee due to performance issues, if that employee’s performance review doesn’t depict those claims of unsatisfactory performance, that review doesn’t provide much support for the suggestion of termination.
• Complaints and Concerns Procedure. Have a documented and communicated procedure in place in which employees can make complaints and voice concerns. This process should make it easy for employees to express themselves and the issues they may be having. If an ‘open-door policy’ is being promoted to employees, make sure it’s actually open and without strings attached or fear of potential repercussions.

Addressing Issues

When issues are present, they must be addressed and not ignored. In the event of terminating an employee, make sure there is a legitimate basis for doing so and evaluate the risk associated with that decision to avoid backlash. In certain situations, companies may want to consider severance agreements to be certain a claim won’t present itself in the future.

Lead by Example

When implementing policies and procedures, they need to be ones in which everyone can follow uniformly and fairly and will do so upon their integration.

The implementation of these business practices will allow for a collective effort to be made simply by following established practices and procedures set forth to avoid litigation through risk minimization.

If you’re unsure if your business has appropriate best practices in please for risk mitigation and litigation avoidance, please reach out to request a consultation or visit Tracy’s bio for her contact information to reach out to her directly.

The post Risk Mitigation & Litigation Avoidance: Part 2 appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

The simplest reason for implementing best practices within a business is to avoid potential litigation and mitigate the risk of liability. Litigation is expensive, which is motivation enough for businesses to avoid it, and although the monetary cost of litigation is an important consideration, the cost of time and employee resources required to engage in litigation should be considered as well. Additionally, without proper consideration, proceeding with litigation can have a negative impact on employees and company morale. When it comes to the contracts and agreements that are common in your business, there are a few things to consider as you evaluate these documents to minimize your risk and avoid situations that tend to lead to litigation.

Establish Capacity

One of the most common disputes among businesses has to do with failure to fulfill contractual obligations. Before entering any agreement, it’s key for the business to determine if they can fulfill the obligations as stated in the contract and that ability and capacity should be clear.  Do you have enough staff? Supplies? Distribution channels?

Understand All Facets of the Contract

Be sure that you can handle the contract you are entering, know who you are contracting with, read the agreement, have someone who knows how to identify trap clauses read the contract (a lawyer), and make sure the business objective is worth the risk, and make sure that everyone is going into it with their eyes open so there are no surprises.

Identify Risk

Understand the real risks associated with the contract. If the worst-case scenario were to happen, what are you willing to chase?  What is the likelihood of a default due to a third-party supplier or distribution vendor?  Whatever those risks are, make sure they are within your tolerance threshold before you sign the contract.

Plan for Unexpected Outcomes

Make sure you understand the contract provisions pertaining to circumstances in which something goes wrong. Having options to cure or remedy defects in the product or delivery of the product can provide a much more palpable option to litigation, which preserves the contract and the relationship between the parties.

In all areas mentioned, it is vital that the business’ key stakeholders are well informed and on board with all aspects of the contract prior to finalization. Often, what is relevant to one area of the businesses isn’t a priority for another, but open communication will help ensure all areas know and understand the needs and objectives across your business. Additionally, the open communication – achieved when keeping the correct people in the loop – will often make it easier to determine if a proposed agreement is suitable, that the business can successfully take on the obligations, and that everyone understands and is comfortable with facing any unexpected outcomes that may come up.

The collaboration of all key players is just as important in the event the business does seek to bring litigation. Having best practices in place to help confirm that proceeding to litigation has company buy-in is key.  Some primary considerations for buy-in include confirming the business has sufficient financial resources (to cover the cost), that the people who need to be involved have the time to commit, and that the business has adequate human capital to reallocate and cover anyone who’s pulled away for the litigation.

If you’re unsure if your business has appropriate best practices in please for risk mitigation and litigation avoidance, please reach out to request a consultation or visit Tracy’s bio for her contact information to reach out to her directly.

The post Risk Mitigation & Litigation Avoidance: Part 1 appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

About the SCOTUS Ruling

In the March 2021 decision,  SCOTUS reviewed two cases from Montana and Minnesota, where Ford was sued for allegedly selling defective auto parts, which resulted in injury to one plaintiff and the death of another plaintiff. Ford argued that it should not be subject to personal jurisdiction in either Montana or Minnesota unless its conduct in those states gave rise to the plaintiffs’ claims. Specifically, Ford argued that it should not be subject to personal jurisdiction in these two states unless the plaintiffs could show that Ford had designed, manufactured, or sold in these states the particular vehicles involved in the accidents. In a rare 8-0 unanimous decision, SCOTUS rejected this argument and held that Ford’s activities in these states was sufficient to support a finding of personal jurisdiction in both cases.

Potential Impact on Small-to-Midsize Manufacturers

The decision in this case could prove extremely problematic for small to midsize businesses, not just because the risk of liability is significantly heightened, but the economic impact should a small business be subject to this ruling could prove devastating. Imagine the owners of a Virginia mom-and-pop store having to fly across the country to litigate in Nevada because a Nevada citizen was injured by one of their products. The costs associated with travel, lodging, and litigation can add up quickly, especially if it is a contentious suit. This may not be a huge issue for a bigger company, but for a smaller business, this could really cut into profit margins, which itself could put the entire business at risk.

Litigation is also often time-consuming. When dealing with a small business that may only have a few employees, or even just one or two owners working together. Asking one or both to be away from the business to litigate in another state could cause permanent damage the business. Let’s face it, if the pandemic taught us nothing else, it proved that time spent away from the business is money lost, which is an obvious issue for small and medium sized businesses.

Broader Litigation Impact

Advances in technology have led many businesses to adopt ecommerce platforms to help them capture sales from a growing cohort of online buyers. This can be a lucrative move for small businesses that are trying to gain more exposure and sell their products in other states. However, an issue of recent contention is determining which states can exert personal jurisdiction over businesses that sell their products online. This is an area many expected might be addressed by SCOTUS in the Ford case, but the Justices were mostly silent, leaving it up to the states to make a determination on specific personal jurisdiction for ecommerce-related litigation.  That kind of uncertainty could be very unsettling for small business owners who sell products online to buyers, for instance, across five states. The implications of the Ford decision could mean that business owners can be sued and taken to court in any of those five states, which could be disastrous for the small business owner.

Another area to watch is climate litigation.  There have been a number of climate cases around the country that have essentially been “on pause” while waiting for SCOTUS to rule on the Ford case.  In King County, Washington, for example, the County filed suit against Exxon Mobil and four other energy companies to hold them responsible for knowingly contributing to climate disruptions and putting the residents of King County at greater risk of natural disasters as a result.  Exxon Mobil filed a motion to dismiss, arguing the mere existence of fuel tanks, gas stations, or other equipment in the County was not sufficient to establish personal jurisdiction. A federal court judge froze those proceedings last year in response to the motion, citing the Ford case and a similar climate-related petition before SCOTUS. With the Ford decision now decided, it is unlikely Exxon Mobil will prevail on their motion and this case, along with several others around the country, may advance beyond the question of personal jurisdiction.

An interesting twist to this decision is its potential applicability in financial services litigation.  Currently, banks and lending companies have asserted principles of general jurisdiction to swat down claims in jurisdictions where they are neither headquartered nor incorporated.  It’s possible plaintiffs may now argue that the Ford decision makes it easier for courts to assert personal jurisdiction over foreign or out-of-state financial institutions, which would be a reversal of precedent set in the 2014 SCOTUS decision of Daimler AG v. Bauman.

Another interesting wrinkle raised by this Ford decision may affect the proliferation of privacy litigation, which has been trending up for years, as corporate entities have grappled with the fallout from data breaches. Privacy, in the context of data collection, is an area of law that often resembles the undeveloped and untamed “wild wild west,” in which plaintiffs often raise new and untested arguments.  In the context of the Ford decision, it is conceivable that a plaintiff could sue in a friendlier forum and argue the applicability of personal jurisdiction in that forum simply because a company’s privacy policy applies to consumers in any state.  It’s also conceivable this argument could be easily defeated because, as mentioned previously, the Ford decision does not directly address issues of ecommerce, which shares many overlaps with privacy litigation.

Lastly, this decision may give rise to forum shopping, as Plaintiffs look to sue in jurisdictions that have a history of Plaintiff friendly verdicts.

Key Takeaways and Next Steps

In all likelihood, the Ford decision by SCOTUS has set up a high degree of probability that the issue of personal jurisdiction will be before them again, sooner rather than later.  Despite that, and the fact that there are more questions left unanswered than are answered, businesses must begin to carefully way their commercial interactions across state lines.  A particularly important consideration for small-to-midsize businesses and manufacturers is the evaluation of liability risk in the event of a cross-border dispute, as the question of personal jurisdiction gains applicability across many types of litigation.

The post SCOTUS Personal Jurisdiction Decision Has Far-Reaching Implications appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Under Internal Revenue Code Section 274(n)(1), a deduction for any expense for food or beverages is generally limited to 50% of the amount that would otherwise be deductible.  However, the Consolidated Appropriations Act enacted in December 2020 allows a temporary exception to the limitation for amounts paid or incurred after December 31, 2020 and before January 1, 2023 for food and beverages provided by a restaurant.  Pursuant to the Act, the temporary exception allows a 100% deduction for food or beverages from restaurants.

Under the new guidance, “restaurants” include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption.  However, “restaurants” do not include businesses that primarily sell pre-packaged goods not for immediate consumption, such as grocery stores, convenience stores, specialty food stores, beer, wine or liquor stores, drug stores, newsstands, and vending machines or kiosks.

Additionally, the guidance explains that an employer may not treat as a restaurant any eating facility located on the employer’s business premises and used in furnishing meals excluded from an employee’s gross income, and certain employer-operated eating facilities, even if these facilities are operated by a third party under contract with the employer.

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