OFF THE RECORD
August 2021
For Businesses, Entrepreneurs & Organizations
Buying or Selling a Business:
The Drive for the Goal Line
We are currently experiencing a significant increase in the number of business buy/sell transactions and it appears that the trend will continue at least through the end of the year. There are a number of reasons for this uptick, including:
                                                    
  • The largest segment of the baby boomer generation is reaching transition age in reference to their businesses and personal wealth.
  • Interest rates remain relatively low.
  • Approximately $900 Billion of “dry powder” is sitting in private equity firms waiting to be deployed.
  • Projected changes in the tax laws will significantly increase capital gains rates.
 
Of all the reasons listed above, the largest factor driving deal flow is the significant increase in the tax rate on capital gains from 20% to 39.6% as part of the Biden tax plan, which is projected to take effect on January 1, 2022. On a transaction with $10,000,000 in capital gain, this increase would represent an additional tax liability of $1,960,000.
D.C. Bans Non-Compete Agreements:
What Does This Mean for Employers?
Earlier this year, Washington, D.C. Mayor Muriel Bowser signed DC B23-0494, an Act also known as the “Ban on Non-Compete Agreements Amendment Act of 2020.” As one may gather from the title of the Act, this legislation essentially bans non-compete provisions from employment agreements in the District of Columbia. Specifically this new law states “no employer operating in the District of Columbia may request or require any employee, working in the District of Columbia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020.”

While the requirements included in non-compete provisions in employment agreements can vary, they typically prohibit an employee from (a) working for a business that competes with the contracted employer, (b) working for any entity or person other than their contracted employer during their “off hours,” (c) working in the same industry or geographical region as their contracted employer for a certain amount of time after their employment ends with that employer, or (d) some combination of these restrictions. Under the new Act, such clauses in an employment contract are unenforceable as a matter of law in the District of Columbia, with only limited exceptions.
Documents Signed Under Seal and the Statute of Limitations
 “Statute of Limitations” has become a common term in popular culture, as in “the statute of limitations is about to run on my patience.” In legal parlance, however, the “statute of limitations” simply refers to the period of time in which one has to file a law suit in order to enforce his or her rights. Once the “limitations” period has expired, a party is forever barred from suing to enforce their rights. 

 In Maryland, the “limitations” period for most contract claims is only three years. Let’s assume, for example, that you perform work for a customer and then send an invoice for which payment is due within 30 days. If the customer fails to pay the invoice, you would have three years from the due date to file a law suit to collect on the invoice. If you fail to file by that three-year deadline, the invoice would essentially become uncollectible. 
For Individuals & Families
What is Maryland Inheritance Tax and Who Pays It?
You may be aware that when a person dies, their estate may be required to pay a federal estate tax if the estate is over a certain size. However, you may be less aware that Maryland also imposes its own inheritance tax in certain situations. Understanding the Maryland Inheritance Tax can help you plan your estate to avoid any unanticipated tax consequences to the beneficiaries of your estate.

What is Maryland Inheritance Tax?

The Maryland Inheritance Tax is a tax imposed on the value of property that passes from a decedent to certain beneficiaries. The tax is assessed on property that passes under a will, the intestate laws of succession (when someone dies without a will), and property that passes under a trust, deed, joint ownership, or otherwise. The Maryland inheritance tax is collected by the Register of Wills located in the county where the decedent either lived or owned Maryland property. 
Firm Spotlight
We are very proud to announce that both Jeffrey T. Agnor and Alisa Gross Cummins have been selected by The Daily Record as a 2021 Leadership in Law recipient. 
 
Leadership in Law Awards recognize Maryland’s legal professionals – lawyers and judges – whose dedication to their occupation and to their communities is outstanding.

“We are thrilled that both Jeff and Alisa are being honored with this prestigious award. Jeff is an excellent transactional attorney, and his dedication to the firm and the community are exceptional. Alisa is a tremendous asset to our firm and a recognized leader in family law bar. Their recognition by The Daily Record as Leadership in Law recipients is an acknowledgement of their loyalty and commitment to their practice, the firm, and their clients,” said Paul Skalny, Managing Director of Davis, Agnor, Rapaport & Skalny. 
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