Current Distributions & Partial Liquidations: Corps vs. Partnerships

Farrell Fritz, P.C.

“You Must Choose, But Choose Wisely.”[I]

The enactment of the Tax Cuts and Jobs Act,[ii] and its undeniable bias in favor of C corporations, has spurred the owners of many closely held businesses, along with their advisers, to reevaluate the form of business entity through which they own and operate their business, and its classification for tax purposes.[iii]

As most readers are aware, the initial choice of entity and tax classification for a business is no small matter, as it will result in certain tax and economic consequences for both the entity and its owners.

A change in a business entity’s tax classification will likewise have a significant impact upon the business, and may even generate an immediate income tax liability.[iv]

You’ve Chosen – Now How Do You Get the Money Out?

Among the several factors to be considered in determining the form and tax status for a business entity, and one that many individual owners appear not to fully appreciate,[v] is the tax treatment of an owner’s withdrawal of value from the entity.

In general, an owner of a closely held business may have several options by which they can withdraw funds from the business without necessarily removing themselves from the business, as distinguished from receiving value in exchange for the business.[vi] For example, an owner may:

  • Receive compensation for services rendered to the business (an employee-employer relationship);[vii]
  • Receive rent for allowing the business to use the owner’s property (a landlord-tenant relationship);
  • Sell property to the business (a seller-buyer relationship);[viii] and
  • “Borrow” money from the business (a debtor-creditor relationship[ix]).

In each of these situations, the owner and the business will often agree to terms that are on the “generous” end of the spectrum of what is reasonable.[x]

Finally, the owners may withdraw funds from the business by causing the business entity to make a distribution with respect to their equity interests therein (a corporation-shareholder or partnership-partner relationship).


Generally speaking, a cash distribution from a business entity to an owner with respect to their equity interest may be effected in one of two ways: a “current” distribution of cash (which does not change the owners’ relative equity in the business); and a distribution in exchange for some of the owner’s equity in the business (a partial redemption of an owner’s shares of stock, or a partial liquidation of the owner’s partnership interest).[xi]

Current Distributions

A current distribution is the most common type of cash distribution made by a business entity. In the case of an entity with only one outstanding class of equity,[xii] each owner of the equity is generally entitled to receive the same amount of cash per unit of equity as every other owner.

The timing and amount of a current distribution may vary widely from business to business. In some cases, the manager of the business will be authorized to determine, in their discretion, if or when to make a distribution, and how much to distribute.[xiii] In other cases, the owners may have agreed that all “available cash” must be distributed at least annually.[xiv] Then there are those situations – in the case of a pass-through entity – where the only distribution required to be made for a taxable year is of an amount of cash sufficient to enable the owners to pay their income taxes attributable to their share of the entity’s profits.[xv] In each of these situations, however, every owner will generally receive a distribution based upon their relative equity in the business.

Partial Redemptions

What if only one owner, out of several, needs a cash distribution? This owner may find themselves in somewhat of a bind, especially if they cannot compel a distribution, or if the entity is unwilling to make a loan to them. What’s more, because an interest in a closely held business is, by definition, not readily marketable, this owner is unlikely to find someone outside the entity who would be willing to purchase some of their equity; in fact, it may be that the owners have agreed not to sell their equity to any outsider.[xvi]

An effective way by which some businesses have addressed this issue is by “creating” a market for the owner who requires more liquidity than may be provided by a current distribution. This “market” is accomplished by causing the entity to periodically offer to buy back a predetermined portion of its equity, usually subject to a value cap set by the entity’s managers that takes into account the reasonable needs and prospects of the business.

Alternatively – and this is the way that most closely held businesses handle the issue – the entity will not have adopted a formal buy-back program; instead, its managers, acting on an ad hoc basis, will decide, when the occasion arises, whether to buy back some of the equity proffered by an owner in need of cash.

The Good, the Bad, the Tax

A cash distribution in partial redemption or liquidation of an owner’s equity in the business provides liquidity for the owner who wants to remove value from the business, may protect the liquidity needs of the business, and may avoid the tension that otherwise could arise among the owners in the absence of a buy-back program.

However, the distribution of cash comes with a business and economic cost to the distributee-owner: their equity interest will have been reduced, they will likely be entitled to a smaller share of business profits, distributions, appreciation and sales proceeds, and they may have a smaller vote in decision-making.

Of course, there is also a tax cost to be considered, which may reduce the amount of cash available to the distributee-owner.

The income tax consequences arising from each of the foregoing cash distributions will depend upon a number of factors, including the form of business entity from which the distribution is made, and the extent to which the owner’s equity in the business is reduced.

Before the Distribution

Before considering the income tax treatment of a cash distribution from a closely held business to its owners, it would be worthwhile reviewing how the entity’s income is taxed without regard to any subsequent distribution of such income.

The taxable income of a C corporation will be subject to federal tax at the corporate level at a flat rate of 21 percent.[xvii] The after-tax income of the corporation will not be taxed to its shareholders until it is distributed to them.[xviii]

An S corporation is generally not subject to a corporate-level income tax.[xix] Rather, its taxable income flows through, and is taxed, to its shareholders[xx] at a maximum federal income tax rate of 37 percent, even though no part of such income has been distributed to the shareholders.[xxi]

In order to allow the subsequent “tax-free” distribution from the S corporation to a shareholder of an amount of cash equal to the amount of corporate income that was already included in the gross income of the shareholder, the shareholder’s adjusted basis for their S corporation shares is increased by the amount of income so included.[xxii]

As in the case of an S corporation, a partnership – including an LLC that is treated as a partnership for tax purposes – is not subject to federal income tax; its taxable income is reported by its partners on their tax returns, and they are taxed thereon without regard to whether any distribution has been made by the partnership.[xxiii]

Also as in the case of the S corporation shareholder, a partner’s adjusted basis for their partnership interest is increased by the amount of partnership income that was included in the partner’s gross income, so as to allow the distribution of such an amount of cash to the partner without triggering additional recognition of income.[xxiv]

Current Distributions

Having reviewed how the owners of a closely held business may withdraw cash from their business entity after it has been taxed to the entity, or to the owners themselves, we now turn to the income tax consequences of a current distribution to the owners.

C Corporation

A cash distribution by a C Corporation to a shareholder with respect to its stock is included in the shareholder’s gross income as a dividend to the extent the distribution is made out of the corporation’s accumulated, and current, earnings and profits.[xxv]

If the distribution satisfies the requirements for a “qualified dividend,” it will be subject to federal income tax in the hands of the shareholder at a rate of 20 percent;[xxvi] it may also be subject to the 3.8 percent federal net investment income surtax.[xxvii]

That portion of the distribution that exceeds the corporation’s earnings and profits will be applied against, and reduce, the shareholder’s adjusted basis for their stock in the corporation; basically, a tax-free return of capital.[xxviii]

To the extent the distribution exceeds the shareholder’s adjusted basis for their stock, the excess portion will be treated as gain from the sale of the stock; in other words, a deemed sale that will likely be treated as capital gain,[xxix] and taxed accordingly at a maximum federal income tax rate of 20 percent (in the case of long-term capital gain); the 3.8 percent surtax may also apply.

Assuming the corporation has only one outstanding class of stock, the declaration and payment of a dividend by the corporation’s board of directors must necessarily be made to every one of its shareholders; a shareholder cannot turn their back on the distribution and its tax consequences.

That being said, a shareholder may, if permitted by the board or by the terms of a shareholder’s agreement, choose to “leave” their share of the cash distribution in the corporation, either as an additional capital contribution or as a loan.

S Corporation

The tax consequences arising from a distribution of cash by an S corporation to its shareholders will depend, in part, upon whether the corporation has any earnings and profits from taxable years when it was a C corporation, or from a target corporation that it may have acquired in a transaction that caused it to succeed to the target’s tax attributes.[xxx] For our purposes, we will assume that the S corporation has no such earnings and profits.

In that case, a distribution of cash by an S corporation with respect to its single class of stock, which would otherwise be treated as a dividend if made by a C corporation with earnings and profits, will first be applied against the distributee-shareholder’s adjusted basis for the stock – a tax-free return of capital – and if the amount of the distribution exceeds the shareholder’s stock basis, the excess will be treated as gain from the sale of property by the shareholder.

This gain will likely be taxed as long-term capital gain,[xxxi] at a maximum federal rate of 20 percent, without regard to the composition of the underlying assets of the corporation. If the corporation’s trade or business represents a passive activity with respect to the shareholder, the 3.8 percent surtax on net investment income may also apply.


In the case of a cash distribution[xxxii] from a partnership to a partner, gain will not be recognized by the partner except to the extent that the amount of cash distributed exceeds the partner’s adjusted basis[xxxiii] for their partnership interest immediately before the distribution.[xxxiv]

Any gain so recognized will be considered as gain from the sale of the partnership interest of the distributee partner.[xxxv] Such gain is generally treated as gain from the sale of a capital asset;[xxxvi] thus, the gain will be treated as long-term capital gain provided the partner’s holding period for their partnership interest is more than one year.[xxxvii] In that case, the maximum federal tax rate applicable to the gain will be 20 percent.

In addition, the gain may also be subject to the 3.8 percent surtax on net investment income, if the partnership’s trade or business is a passive activity with respect to the partner.[xxxviii]

However, if any of the cash deemed to have been received by the partner – in the deemed sale of their partnership interest – is attributable to any unrealized receivables[xxxix] of the partnership, or to inventory items of the partnership, then the amount of cash attributable to such assets will be treated as having been received from the sale of such assets, not from a capital asset, and will be treated as ordinary income.[xl]

Partial Redemption/Liquidation

If the current distribution described above did not occur, or if the amount thereof was insufficient for the needs of a particular owner, and assuming the business entity has agreed to redeem a portion of this owner’s equity in the business in order to get them additional cash, what are the tax consequences to the owner?

C Corporation

The tax consequences to a shareholder, some of whose shares of stock in the C corporation are acquired by the corporation from the shareholder in exchange for cash – a redemption[xli] – will depend upon the degree by which the shareholder’s ownership in the corporation is reduced relative to the ownership of the other shareholders.[xlii]

Thus, if every shareholder sold 10 percent of their shares to the issuing corporation (a pro rata redemption), none of the shareholders will have experienced a reduction in their relative ownership. In that case, and in every case in which the redemption does not result in a “meaningful” reduction[xliii] of a shareholder’s relative interest in the corporation, the cash paid by the corporation to the shareholder in exchange for some of their shares will be treated and taxed as “essentially equivalent” to a dividend, as described above, and the shareholder’s adjusted basis in the redeemed shares will be reallocated among the shareholder’s remaining shares of stock in the corporation.

However, if only one shareholder sold all but one of their shares of stock in the corporation, and such reduction was meaningful – for example, the percentage ownership represented by that one remaining share may be so small relative to the percentage of the total number of outstanding shares of the corporation that the shareholder owned before the redemption – that the redemption may be treated instead as “not essentially equivalent to a dividend;”[xliv] specifically, as a distribution in exchange for the shares redeemed by the corporation.

In that case, the shareholder will be treated as having sold the redeemed shares to the corporation and will realize gain equal to the excess of the amount paid by the corporation over the shareholder’s adjusted basis for the redeemed shares. Because the shares were likely a capital asset in the hands of the shareholder, this gain may be long-term capital gain if the shareholder’s holding period for such shares was more than one year, in which case it would taxable at a federal rate of 20 percent; the 3.8 percent federal surtax may also apply.[xlv]

The Code provides a “safe harbor” which, if satisfied, will cause the redemption of a portion of a shareholder’s shares to be treated as a sale of such shares. Specifically, immediately after the redemption, the shareholder must own less than 50 percent of the total combined voter power of the corporation’s shares. In addition, the redemption distribution must be “substantially disproportionate” with respect to the shareholder; meaning that the ratio which the voting stock of the corporation owned by the shareholder immediately after the redemption bears to all of its voting stock at that time, is less than 80 percent of the ratio which the shareholder’s voting stock before the redemption bore to all of the voting at such time. Finally, the shareholder’s ownership of all of the common stock of the corporation (voting and nonvoting) after and before the redemption, must also meet the 80percent requirement.[xlvi]

S Corporations

As in the case of a shareholder of a C corporation, the tax consequences to a shareholder, some of whose shares of stock in an S corporation are redeemed by the S corporation for cash, will depend upon the degree by which the shareholder’s ownership in the S corporation is reduced relative to the ownership of the other shareholders of the corporation.

If the reduction in the shareholder’s stock ownership is meaningful or significant enough to qualify as a sale of stock by the shareholder, then the shareholder’s gain from the redemption will be equal to the excess of the amount of cash distributed by the S corporation over the shareholder’s adjusted basis for the shares redeemed.

Provided the shareholder held the redeemed shares for more than one year, the gain will be treated as long-term capital gain, without regard to the composition of the underlying assets of the corporation, and will be taxable at a federal rate of 20 percent. If the corporation’s trade or business represents a passive activity with respect to the shareholder, then the 3.8 percent surtax may also apply to the gain.

If, instead, the redemption is treated as a current distribution, then the amount of cash distributed will be applied against the shareholder’s adjusted basis for all of their shares in the corporation, not only those shares that were redeemed. Only after the shareholder’s entire stock basis is exceeded will any remaining cash be treated as gain from the sale of a capital asset by the shareholder.


The term “liquidation of a partner’s interest” is defined as the termination of a partner’s entire interest in a partnership by means of a distribution, or a series of distributions.[xlvii]

A distribution which is not in liquidation of a partner’s entire interest is treated as a current distribution for tax purposes. Current distributions, therefore, include distributions in partial liquidation of a partner’s interest,[xlviii] regardless of how substantial the reduction of the partner’s interest may be.[xlix]

In light of the foregoing, the same rules will apply to a partial liquidation of a partner’s equity in a partnership as apply to a current distribution. Gain will not be recognized by the partner except to the extent that the amount of cash distributed in partial liquidation of the partner’s interest – which will include the amount by which the distributee-partner’s share of partnership liabilities is reduced as a result of the reduction of the partner’s interest in partnership profit and loss[l] – exceeds the partner’s adjusted basis for their partnership interest immediately before the distribution.[li]

The gain recognized will be considered as gain from the sale of the partnership interest,[lii] and will generally be treated as gain from the sale of a capital asset,[liii] except to the extent any of the cash received by the partner is attributable to any unrealized receivables[liv] or inventory of the partnership, in which case such amount will be treated as having been received from the sale of such assets and will be treated as ordinary income.[lv]

What’s more, even if the amount of cash distributed in a partial liquidation of a partner’s interest does not exceed the distributee-partner’s adjusted basis in such interest, the partner may still be required to recognize gain from the deemed sale of certain partnership property.

Specifically, if the distributee-partner’s receipt of cash in partial liquidation of their interest results in a reduction of their share of the partnership’s unrealized receivables or inventory – as one might expect it would – the distributee-partner will be treated as having sold a portion of their interest in such receivables and inventory in exchange for a portion of the cash distribution, thereby realizing ordinary income.[lvi]

So Much for Simplicity

It is likely that a number of readers never thought that the “simple” distribution of cash by a corporation or a partnership to its owners could raise so many issues or present so many traps from a tax perspective.

The fact remains, however, that shareholders and partners are not going to turn their backs on a proffered, agreed-upon, or planned cash distribution, notwithstanding the potential tax consequences.

For that reason, it will behoove them to plan carefully for, and sufficiently in advance of, any such distributions in order that they may first identify any lurking tax issues and, having done so, to consider how to best address them.

As Fran Lebowitz once said, “A dog who thinks he is man’s best friend is a dog who obviously never met a tax lawyer.”


[i] Remember the scene with the ancient knight and the search for the Holy Grail in Indiana Jones and the Last Crusade?

[ii] P.L. 115-97. In order to level the proverbial “playing field,” the Act also added Sec. 199A to the Code, which provides a special deduction for the non-corporate owners of partnerships and for the shareholders of S corporations.

[iii] Usually an LLC taxable as a partnership, or an S corporation.

[iv] For example, the change from an association to a partnership or disregarded entity, which is generally treated as taxable liquidation of the association. See Reg. Sec. 301.7701-3(g). Another example would be the change in accounting method, from cash to accrual, that may accompany a change from S corporation to C corporation status, the resulting accelerated recognition of income, and the related tax liability.

[v] At least in my experience.

[vi] For example, following the sale of the assets of the business, or upon the sale of their equity in the business, to a third party.

[vii] “Guaranteed payments” when made by a partnership to a partner in exchange for their services or the use of their property. IRC Sec. 707(c).

[viii] Subchapter K includes “disguised sale” rules for certain cash distributions by a partnership to a partner that are related to a contribution of property by the partner to the partnership. IRC Sec. 707; Reg. Sec. 1.707-3. For purposes of our discussion, it is assumed that these rules do not apply.

[ix] This is a relationship that taxpayers often struggle to demonstrate when challenged to do so by a taxing authority. Where there is no written evidence of a loan (like a promissory note), no interest charged, no maturity date, no collateral, and no reported distributions with respect to equity, the taxing authority will likely succeed in re-characterizing the purported loan as a distribution.

[x] These are the basic withdrawal mechanisms.

They may be structured as directly as described in the text, or they may be accomplished indirectly, as where the business entity pays an owner’s personal expense or allows the owner to use business property without adequate consideration.

In these cases of constructive or imputed withdrawals of value, the taxpayer and the taxing authorities are left to determine the parties’ intentions (for example, was the payment a form of compensation or a dividend), and the tax treatment of the withdrawal, based on the facts and circumstances.

Although the converse of these situations – as where an owner receives the services of the entity, or uses or purchases its property – does not result in the withdrawal of funds from the entity, it may nevertheless enrich the owner if the terms of the arrangement are other than arm’s-length.

[xi] Of course, a business entity may also effect a complete redemption or liquidation of the owner’s entire equity, thereby removing the owner from the business. IRC Sec. 302(b)(3); IRC Sec. 736.

[xii] S corporations are allowed only one class of stock outstanding. IRC Sec. 1361(b).

[xiii] In the case of a C corporation that accumulates earnings in excess of the reasonable needs of its business, the corporation may be subject to an additional 20 percent tax. The accumulated earnings tax does not apply to S corporations and partnerships because these are flow-through entities, the income of which is taxable to their owners without regard to whether the income has been distributed to such owners.

[xiv] With the exception of reasonable reserves, why leave the money where creditors can get it? Or so the thinking goes.

[xv] This may sound straightforward, but there are many formulations. For example, should the entity use an assumed tax rate for all of its owners? Should the individual tax attributes of an owner be considered?

[xvi] This agreement may be coupled with a right of first refusal for the purpose of ensuring that the other owners, or the entity itself, will purchase the “selling” owner’s interest.

[xvii] IRC Sec. 11.

[xviii] This may be like music to the ears of a minority shareholder – a low entity-level tax, and no flow-through of income to the minority owner, with its resulting tax liability.

[xix] IRC Sec. 1363.

For our purposes, we will assume that neither the built-in gains tax, nor the tax on excess passive investment income, applies. IRC Sec. 1374 and IRC Sec. 1375.

[xx] IRC Sec. 1366.

[xxi] The surtax on net investment income may also apply to a shareholder if the shareholder does not materially participate in the business. IRC Sec. 1411.

[xxii] IRC Sec. 1367. The distribution reduces the shareholder’s adjusted basis.

[xxiii] IRC Sec. 701 and Sec. 702.

With respect to both the shareholders of an S corporation and the partners of a partnership, the IRC Sec. 199A deduction must be considered after 2017.

[xxiv] IRC Sec. 705. The distribution reduces the partner’s adjusted basis.

[xxv] IRC Sec. 301(c)(1), Sec. 316.

[xxvi] IRC Sec. 1(h)(11).

[xxvii] IRC Sec. 1411.

[xxviii] IRC Sec. 301(c)(2).

[xxix] IRC Sec. 301(c)(3).

[xxx] IRC Sec. 381; IRC Sec. 1368(c); Reg. Sec. 1.1368-1(d).

[xxxi] Assuming the holding period is satisfied.

[xxxii] Marketable securities may be treated as cash for this purpose. IRC Sec. 731(c). As mentioned elsewhere in this post, a partnership’s satisfaction of a partner’s individual liability is treated as a distribution of cash to the partner. Likewise, a reduction in a partner’s share of a partnership’s liabilities is treated as distribution of cash. IRC Sec. 752(b).

[xxxiii] The so-called “outside” basis. It should be noted that a partner’s outside basis is adjusted for the partner’s share of partnership income, deduction, etc., only on the last day of the partnership’s taxable year.

[xxxiv] IRC Sec. 731(a)(1).

If the partnership makes, or has in effect, a Sec. 754 election, the adjusted basis of the partnership assets may be increased by the amount of gain recognized by the distributee-partner. IRC Sec. 734; Reg. Sec. 1.734-1(b).

[xxxv] IRC Sec. 731(a), last sentence.

[xxxvi] IRC Sec. 741.

[xxxvii] Of course, it is possible for a partner to have a split-holding period for their partnership interest, with some of the gain being treated as short-term capital gain. Reg. Sec. 1.1223-3.

[xxxviii] IRC Sec. 1411(c)(2).

[xxxix] IRC Sec. 751(c). This includes, for example, cash basis receivables for services rendered, plus Sec. 1245 property.

[xl] IRC Sec. 751.

[xli] IRC Sec. 317.

[xlii] Attribution rules are applied for this purpose. IRC Sec. 318.

[xliii] Very much a facts and circumstances determination, depending, among other things, upon whether the stock was voting or nonvoting, and how the redemption affected the shareholder’s ability to exercise a degree of control. For example, a redemption that causes the shareholder to become a minority owner may qualify as an exchange.

[xliv] IRC Sec. 302(b)(1).

[xlv] IRC Sec. 1001; IRC Sec. 1221 and Sec. 1222.

[xlvi] IRC Sec. 302(b)(2).

[xlvii] A series of distributions may be made in one year or in more than one year, so long as they are intended to liquidate the partner’s entire interest in the partnership.

[xlviii] Reg. Sec. 1.761-1(d).

[xlix] Compare this to the case of a corporate redemption.

[l] IRC Sec. 752(b).

[li] IRC Sec. 731(a)(1).

[lii] IRC Sec. 731(a), last sentence.

[liii] IRC Sec. 741.

[liv] IRC Sec. 751(c). This includes, for example, cash basis receivables for services rendered, plus Sec. 1245 property.

[lv] IRC Sec. 751(a).

[lvi] IRC Sec. 751(b). Thankfully, this result may be avoided if the partners agree to adjust their capital accounts prior to the partially liquidating distribution; such an adjustment (and the resulting allocation) would be based upon the partners’ interests before the partial liquidation.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.