Selling S Corporation Stock – Are You Sure?

Farrell Fritz, P.C.

Still a Valid S Corporation?

Much has been written regarding the limitations of the S corporation, especially the requirement that it have only one class of stock, and the prohibition against its having nonresident aliens, partnerships, or other corporations as shareholders. The fact remains, however, that there are thousands of S corporations in existence, out of which many closely held businesses operate.

For these businesses, the satisfaction of these requirements – i.e., living within these limitations and the attendant “lost opportunities”[i] – is the cost of securing and maintaining the corporation’s status as a pass-through entity[ii] for tax purposes.

There is one point in the life of the business, however – perhaps the most inopportune time – at which a corporation’s failure to satisfy these requirements or, stated somewhat differently, its inability to demonstrate that it has satisfied them, may cost its shareholders dearly. I am referring to the sale of the business and, in particular, the sale of all of its issued and outstanding stock.

I wish I could say that it is rarely the case for an S corporation that is in the midst of negotiating the sale of its business to discover that it may have lost its “S” status by virtue of having, for example, two outstanding classes of stock, but that would be inaccurate, as illustrated by a recent IRS letter ruling.[iii]

Before delving into the ruling, it may be helpful to review the “one class of stock” requirement and the tax consequences of a sale of an S corporation’s stock.

One Class of Stock

Under the Code, a corporation that has more than one class of stock does not qualify as a “small business corporation.”[iv]

A corporation is treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds.[v]

Differences in voting rights among shares of stock are disregarded in determining whether a corporation has more than one class of stock.[vi] Thus, if all outstanding shares of stock of an S corporation have identical rights to distribution and liquidation proceeds, the corporation may have voting and nonvoting stock.

In general, the determination of whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter, articles of incorporation, bylaws, applicable state law, and binding agreements relating to distribution and liquidation proceeds.[vii]


If a corporation qualifies as a small business corporation,[viii] and if its shareholders elect to treat the corporation as an S corporation for tax purposes[ix], then the corporation’s items of income, gain, deduction, loss, or credit will flow through to its shareholders, based on their respective pro rata shares, and will be taken into account in determining each shareholder’s income tax liability.[x]

The S corporation, itself, will not be subject to federal income tax.[xi]

Thus, the gain from the sale of the assets of an S corporation – or from the deemed sale of its assets (see below) – will be included in the gross income of its shareholders for purposes of determining their individual income tax liability. What’s more, the character of any item of gain (as ordinary or capital gain) that is included in a shareholder’s pro rata is determined as if such item were realized directly from the source from which realized by the corporation, or incurred in the same manner as incurred by the corporation.[xii]

A Stock Sale . . . ?

At this point, some may be wondering why the purchaser of an S corporation’s business would be acquiring the corporation’s stock instead of its assets.[xiii]

After all, in a stock deal, the buyer necessarily acquires all of the assets of the target S corporation,[xiv] both the assets that are necessary to the operation of the business, as well as those that aren’t. The buyer also takes subject to all of the target S corporation’s liabilities, both known and unknown, absolute or contingent,[xv] whether or not related to the operation of the business, including any liability for taxes owing by the target corporation.[xvi]

The buyer of stock also loses the opportunity, generally speaking, to step-up the basis of the assets acquired from the S corporation to their fair market value – the buyer’s cost for acquiring the assets[xvii] – and to expense, depreciate or amortize such cost, as the case may be, and to thereby recover their investment (i.e., the purchase price) faster than in the case of a purchase of stock.[xviii]

That being said, there are circumstances in which either the purchaser, or the shareholders of the target S corporation, may favor a stock deal.

For example, the S corporation may hold unassignable licenses or permits, or there may be contracts or other agreements, the separate transfer of which may require consents that will be difficult or too time-consuming to obtain.[xix]

A stock deal may also be easier to effectuate where the target S corporation’s assets are so numerous or extensive that it would be difficult or costly to transfer them separately. The purchase of the target’s tock would ensure the buyer of acquiring all of the necessary business assets owned or used by the corporation.

It may be that the purchaser wants to keep the corporation intact – as a going concern – perhaps after determining that the business has few liabilities,[xx] while also recognizing that is has great potential as is; only the management of the business needs to change.

Finally, the shareholders of the target S corporation will usually prefer a stock deal because it ensures them that their gain from the sale of the stock will be treated as long term capital gain for tax purposes.[xxi] If the purchaser wants the business badly enough, they will accede to the shareholders’ request.[xxii] It comes down to a question of leverage and risk allocation.

. . . And A Basis Step-Up?

Fortunately for the buyer, its decision to acquire the stock of a target S corporation does not always mean that the buyer must forfeit the ability to depreciate or amortize the purchase price. Even in the case of a stock deal, it may still be possible for the buyer to acquire a cost basis for the target S corporation’s assets, provided the selling shareholders agree to make one of two elections, depending upon the tax status of the buyer.[xxiii]

Thus, if the buyer is a single corporation, the buyer and each shareholder of the target S corporation may jointly elect to ignore the stock sale and to treat the transaction, instead, as a sale of assets by the target S corporation to a subsidiary of the buyer corporation, followed by the liquidation of the S corporation.[xxiv]

If the buyer is not a single corporation – for example, a partnership, an individual, or more than one person – then the shareholders of the target S corporation may be able to elect (without the consent of the buyer, but certainly at its insistence) to treat the stock sale as a sale of assets, as described above.[xxv]

It is unlikely that the shareholders of the target S corporation would make either of these elections unless they were asked to do so by the buyer. In that case, it is still unlikely that the shareholders would consent to the election unless they were compensated for any additional tax (including any deficiency) imposed upon them as a result of treating the transaction as a sale of assets – which may generate some ordinary income,[xxvi] or even corporate-level gain if the sale occurs during the corporation’s “recognition period”[xxvii] – followed by a liquidation of the target corporation (which may, itself, generate additional capital gain).[xxviii]

This compensation often takes the form of a “gross-up” in the purchase price for the target S corporation’s stock, such that the shareholders’ after-tax proceeds of a stock sale for which an election is made will be equal in amount to their after-tax proceeds of a stock sale without an election.[xxix]

Significantly, neither of these elections is available where the target is a stand-alone C corporation. Thus, it is imperative that the target corporation’s “S” election be intact at the time of the stock sale.

Which brings us to the letter ruling referenced above.

A Failed “S” Election?

Corp was a C corporation. Its board of directors amended Corp’s articles of incorporation to divide its common stock into shares of class A stock and shares of class B stock. The class A shares retained voting power and the class B shares held no voting power. The class A and class B shares otherwise conferred identical rights to distribution and liquidation proceeds.

The board subsequently amended Corp’s articles for a second time, to change the liquidation rights of the corporation’s stock. After this amendment, the class A and class B shares were entitled to receive equal shares of any assets of Corp in liquidation until a specified amount had been paid to each share. Upon reaching this amount in liquidation proceeds per share, the class B shares were entitled to receive the balance of any remaining assets of the corporation.

Corp later filed an election[xxx] to be taxed as an S corporation for tax purposes. At that time, Corp had only two shareholders.

Somehow unbeknownst to Corp, the election was ineffective because Corp’s two classes of stock prevented it from qualifying as a small business corporation. Corp claimed that its tax advisors were unaware of this amendment.

In addition, according to Corp, at the time this election was filed, its board of directors was either unaware or had forgotten that the distribution and liquidation rights had been changed, and differed for class A and class B shares, as a result of the second amendment to Corp’s articles of incorporation.

Corp indicated that its legal counsel discovered the second amendment,[xxxi] which created two classes of stock, in connection with due diligence performed by counsel in connection with the proposed sale of Corp’s stock by its two shareholders (the “Transaction”).

Upon learning of this issue, Corp’s board amended Corp’s articles prior to the Transaction to reconstitute the class A and class B shares into a single class of stock, with identical rights to distribution and liquidation proceeds, in order to rectify the ineffectiveness of Corp’s S corporation election.

Corp also asked that the IRS recognize the corporation’s status as an S corporation, effective retroactively as of the date requested by its original election.

In support of its request, Corp represented that it and its shareholders filed their respective tax returns consistent with Corp being an S corporation since the time of the failed election.

On the basis of the foregoing facts, the IRS concluded that Corp’s S corporation election was ineffective when made, as a result of the second class of stock that was created by the second amendment to Corp’s articles.

However, the IRS also determined that the circumstances resulting in the ineffectiveness of Corp’s election were inadvertent,[xxxii] and were not motivated by tax avoidance or retroactive tax planning.

The IRS also found that, no later than a reasonable period of time after discovery of the circumstances resulting in the ineffective election, steps were taken so that Corp qualified as a small business corporation.

Thus, the IRS decided to respect the “S” election,[xxxiii] provided that Corp, and each person who was a shareholder of Corp at any time since the date of the election, agreed to make any adjustments to their tax returns – consistent with the treatment of Corp as an S corporation – that may be required by the IRS with respect to the period beginning with what would have been the effective date of the election, through the date of the Transaction.

What If?

Corp and its shareholders were fortunate that the failed election was discovered prior to the consummation of the Transaction. It appears that they had sufficient time before the Transaction to request relief from the IRS, as reflected in the ruling described above.[xxxiv] It also appears that they had an understanding buyer; one that was willing to wait for them to put their tax situation in order.

What if events had unfolded differently?

For one thing, the buyer could have walked away from the deal. There are always other buyers, right? Or are there?

Perhaps the purchase price offered by this buyer was the highest that Corp and its shareholders had received. Or perhaps this buyer was the only one who had agreed to pay a gross-up to Corp’s shareholders in connection with an election to treat the stock sale as a sale of assets. Moreover, this buyer may have been the only one that agreed to pay the entire purchase price at closing, in cash, whereas other suitors had included a promissory note or an earn-out, each payable over a number of years, as part of their consideration for Corp’s stock. Or maybe this buyer had agreed to keep the business at its present location, and to lease such location from the former shareholders of Corp, who happened to own the property in a separate business entity, whereas other potential buyers had planned to consolidate Corp’s business into one of their other locations.

You get the picture.

Another “What If:” The SPA

What if the Transaction had closed without either side being aware of the failed “S” election, and what if the buyer had discovered the failure on its own after the sale? Worse yet, what if the IRS had audited Corp’s returns for the periods ending on or prior to the Transaction?

In the typical stock purchase agreement, the buyer asks that the sellers and the target S corporation make certain representations as to their stock ownership and as to the business and legal condition of the corporation. As in the case of other representations, these play a due diligence function in that the seller’s willingness to make a certain representation, or to schedule an exception to the representation, will disclose facts that are important to the buyer.

The representations also afford the buyer the opportunity to walk away from a deal where the closing occurs some period after the SPA has been executed by the parties.[xxxv] The sellers will state that their representations were accurate on the execution date, and will continue to be accurate through the closing. To the extent there is a “material” change in the accuracy of a particular representation, or if the buyer discovers that a representation is incorrect, then the buyer may call off the deal.

Finally, if the buyer suffers an economic loss after the closing that is attributable to an inaccurate representation, the buyer make seek to be indemnified by the sellers on account of the breached representation. The fact that the buyer had been given the opportunity to examine the target corporation’s records and documents prior to the sale will not provide a defense for the sellers.[xxxvi]

In the case of a target S corporation, the buyer may ask for the following representations and covenants (among many others) from the corporation and its shareholders: that the target S corporation has been a validly electing S corporation at all times, and will continue as such through the closing; that the corporation is not liable for the built-in gains tax; that they will not revoke the corporation’s “S” election, or take any action, or allow any action to be taken, that would result in the termination of such election (other than the sale to the buyer); and, at buyer’s option, that they will make an election to treat the stock sale as an asset sale for tax purposes.

Fast forward. The stock sale is completed and the target corporation is now a subsidiary of the buyer. The buyer subsequently learns that the target’s “S” election was either ineffective or had been lost prior to the closing of the stock sale. The buyer realizes that its newly acquired subsidiary was, in fact, a C corporation during the period preceding its acquisition.

As a result, the new subsidiary is liable for corporate-level income taxes for tax periods ending on or before the date of its acquisition by the buyer.

What’s more, the buyer and/or sellers’ election to treat the stock sale as a sale of assets was also ineffective. Consequently, the buyer did not obtain a recoverable basis step-up for the assets of its new subsidiary.

In addition, the buyer’s gross-up payment to the former shareholders of the target corporation need not have been made.

In short, the immediate economic result to the buyer from its purchase of the target corporation’s stock is substantially different from what it had planned, bargained for, and expected.

The buyer looks to the sellers to indemnify it for these economic losses. The buyer may be able to “recover” part of this loss from any portion of the purchase price that it had withheld, whether in the form of a promissory note, an escrow arrangement, or otherwise. The buyer may also have to seek recovery directly from the sellers.

In short, the economic result for the sellers is substantially different from what they had planned, bargained for, and expected.

Ease Their Pain

If the shareholders of an S corporation were honest with themselves, this is the point at which they wish they had listened to the very simple and straightforward counsel of their tax and corporate advisers.[xxxvii]

Among the nuggets of advice most often ignored by shareholders are the following:

  • Enter into a shareholders’ agreement that includes transfer restrictions, as well as other safeguards, for preserving the corporation’s “S” status, including the buyout of shares where necessary;
  • Require shareholders to share their estate plans (on a confidential basis) with the corporation’s counsel, so as to avoid any surprise transfers of their shares at their demise (like a transfer to a nonresident alien);
  • Require shareholders to cooperate in restoring the corporation’s “S” election in the event it is inadvertently lost;
  • Do not amend any corporate organizational or governing documents, and do not enter into any commercial agreements with shareholders, without first seeking tax counsel’s advice;
  • Do not issue any convertible debt instruments without first seeking counsel’s advice;
  • Do not issue equity-based compensation without first seeking counsel’s advice;
  • Keep meticulous and contemporaneous records of any and all stock transfers;
  • Provide for a drag-along right by which a majority shareholder may compel a minority shareholder to join in the sale of the corporation’s stock; and
  • Require minority shareholders to join in making an election, at the option of the majority owner, to treat a stock sale as a sale of assets.

Granted, some of these are more easily attainable than others; for example, a minority shareholder may resist some of these suggestions.

One truth that cannot be disputed, however, is the following: a business owner should start to prepare for the sale of their business as soon as they go into business; they should act accordingly throughout the life of the business; getting the business “ready” for a sale is not something that they can adequately address just prior to the sale.

[i] For example, the infusion of equity from an investment partnership, or from an investor who wants a preferred return in exchange for their capital contribution, perhaps in the form of convertible preferred stock.

[ii] An entity that is not, itself, taxable, but the income, loss, etc., of which passes through to its owners.

[iii] PLR 201935010.

[iv] IRC Sec. 1361(b)(1)(D).

The term “S corporation” means, with respect to any taxable year, a small business corporation for which an election under Sec. 1362(a) is in effect for such year.

IRC Sec. 1361(b)(1) defines a “small business corporation” as a domestic corporation which is not an “ineligible” corporation and which does not (A) have more than 100 shareholders, (B) have as a shareholder a person (other than an estate, a trust described in Sec. 1361(c)(2), or an organization described in Sec. 1361(c)(6)) who is not an individual, (C) have a nonresident alien as a shareholder, and (D) have more than one class of stock. Sec. 1362(a)(1) provides that a small business corporation may elect to be an S corporation.

[v] Reg. Sec. 1.1361-1(l).

[vi] IRC Sec. 1361(c)(4).

[vii] Reg. Sec. 1.1361-1(l)(2). It should be noted that other arrangements may be treated as creating a second class of stock if a principal purpose thereof is to circumvent the one class of stock requirement.

[viii] IRC Sec. 1361(b).

[ix] IRC Sec. 1362.

[x] IRC Sec. 1366. These amounts will be reflected on the Schedule K-1 issued by the S corporation to each of its shareholders.

[xi] IRC Sec. 1363. There are exceptions; for example, where the built-in gain rule applies. IRC Sec. 1374.

[xii] IRC Sec. 1366(b).

[xiii] We’ll consider only a couple of the factors that favor an asset deal over a stock deal. There are others, including, for example: the target corporation’s ability to sell its assets to the buyer even in the face of opposition from some minority shareholders (though the sale may trigger dissenter’s rights); and the buyer’s ability to select which assets it wants to acquire, and which liabilities it will assume.

Speaking of recalcitrant shareholders, this is where the absence of a shareholders’ agreement with a drag-along provision may be felt keenly.

[xiv] Indirectly; in a sense, the buyer steps into the shoes of the selling shareholders.

[xv] Sellers in a stock deal are always asked to represent to the buyer that the corporation has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise, except (a) those which are adequately reflected or reserved against in the balance sheet [as of a specified date], and (b) those which have been incurred in the ordinary course of business consistent with past practice since the [date of the balance sheet] and which are not, individually or in the aggregate, material in amount.

[xvi] Because of this exposure, a stock deal will require more due diligence, which means the expenditure of more time and fees by both the buyer and the seller(s).

It will likely also require the buyer’s holdback or escrowing of a greater portion of the purchase price for a greater period of time.

With respect to the corporation’s tax liabilities, the parties will have to agree as to the preparation of returns, and the payment of any amounts owing, for tax periods ending on or before the closing date, or which begin before the closing and end some time after the closing date.

A related issue will be a more extensive indemnity agreement by the selling shareholders to indemnify the buyer for any losses suffered by the buyer as a result of a breach of a representation by the sellers regarding the state or condition of the target corporation and its business.

[xvii] IRC Sec. 1060 and Sec. 1012. In general, Sec. 1060 requires that the purchase price for the acquisition of the business be allocated among its assets.

[xviii] The cost of which is generally recovered only upon the subsequent sale of the stock or the liquidation of the corporation. IRC Sec. 168(k), Sec. 167, and Sec. 197. The Tax Cuts and Jobs Act (P.L. 115-97) extended the bonus depreciation deduction by allowing a buyer to expense the cost of certain “used” tangible personal assets.

[xix] Note, however, that many contracts include change-in-control provisions pursuant to which the “assignment” of the contract requires the consent of a party where the ownership of the “assigning” party (i.e., the target corporation) changes, as in the case of a stock deal. A large part of the due diligence process involves reviewing the target’s contracts and determining whether such consents are required,

[xx] Or liabilities that are manageable.

[xxi] Where there are too many shareholders with whom to negotiate, or where there are some shareholders who do not want to sell their shares, the stock deal may be structured as a reverse subsidiary merger. The result of such a merger is that the target corporation becomes a subsidiary of the acquiring corporation. For tax purposes, the transaction is treated as a purchase and sale of stock. See, e.g., Rev. Rul. 90-95.

[xxii] IRC Sec. 1221 and Sec. 1222. An individual’s gain from the sale of stock in a corporation (“S” or “C”) is taxed as capital gain; if the gain is long-term, a federal income tax rate of 20-percent will be applied; the same holds true for trusts and estates. IRC Sec. 1(h).

This should be compared to the sale of partnership interests. Although generally treated as the sale of a capital asset, the gain will be treated as ordinary income to the extent the purchase price for the interest is attributable to so-called “hot assets.” IRC Sec. 741 and Sec. 751.

If the selling shareholder did not materially participate in the business of the corporation, the federal surtax of 3.8-percent of net investment income will also apply to the gain. IRC Sec. 1411.

[xxiii] Congress recognized that there are circumstances in which the buyer has a bona fide business (non-tax) reason to acquire the stock of a target corporation. In some such cases, Congress decided it would be improper for the buyer to give up its ability to recover its purchase price for tax purposes; i.e., to have to choose between good business decision and a tax benefit. The result was the elections discussed below.

[xxiv] IRC Sec. 338(h)(10); Reg. Sec. 1.338(h)(10)-1.

[xxv] IRC Sec. 336(e); Reg. Sec. 1.336-1 through -5. It should be noted, if the buyer of the target’s stock does not want the sellers to make a Sec. 336(e) election, it should include a prohibition of such an election in the stock purchase agreement; specifically, a covenant not to make the election.

[xxvi] You’ll recall that the character of the gain – for example, ordinary income from the sale of receivables, or depreciation recapture from the sale of machinery – passes through to the target S corporation’s shareholders. The maximum federal tax rate for ordinary income included in the gross income of an individual is 37-percent.

[xxvii] IRC Sec. 1374.

[xxviii] IRC Sec. 331; Sec. 1371.

[xxix] The gross-up amount paid by the buyer will end up being allocated to the target’s goodwill and going concern value, and will be amortizable over 15 years under IRC Sec. 197.

[xxx] IRS Form 2553.

[xxxi] Presumably, counsel did not prepare or file the second amendment.

[xxxii] Within the meaning of IRC Sec. 1362(f).

[xxxiii] Assuming that Corp met all of the other requirements for status as a small business corporation.

[xxxiv] Or perhaps they asked for expedited handling.

[xxxv] As opposed to signing and closing on the same day.

[xxxvi] Query whether the sellers’ and the target’s attorneys have done their own diligence.

[xxxvii] “You can pay us now to fix the problem, and avoid bigger issues down the road,” they said, “or you can ignore us now, and pay a lot more to someone else down the road.”

[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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    • 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.