Since the characteristics of a “SAFE” differ from those of the more traditional debt and participation shares, the tax treatment of a SAFE may not be clear. There are a few details that any SAFE owner should know: the IRS has decided that a CFVP is respected as a CFVP and is not considered the sale of the underlying action as long as the taxpayer (1) has received a fixed amount of money, (2) has entered into an agreement at the same time to deliver a certain number of shares at a later date, which have changed significantly on the basis of the value of the shares on the day of the stock exchange, (3) the maximum number of shares delivered under the agreement, as a pledge under the agreement, (4) retained an unlimited legal right to replace cash or other shares with mortgaged shares, and (5) was not held , economically, to provide the mortgaged shares on the contract`s expiry date.15 The IRS`s conclusion that the taxpayer did not sell the shares at the time of the contract and that the contract in the long run, it was to be treated in the first place as a CFVP was primarily due to one, including the fact that the seller held all the participation rights and that the taxpayer was not required to deliver the guaranteed shares to the counterparty. In the typical SAFE agreement, the entity receives a fixed amount of money and at the same time enters into an agreement for the delivery of a number of shares or a cash amount that varies considerably depending on the value of the shares at the settlement date. In addition, until the shares are delivered, the investor does not have dividends or voting rights on those shares. As a result, the benefits and expenses of ownership of these shares were probably not transferred to the investor. When answering the question of whether a SAFE should be considered a debt, capital or derivative of equity, these legal rights must be balanced against concrete facts and circumstances. 1 See blog.ycombinator.com/announcing-the-safe-a-replacement-for-convertible-notes/ (called 20.04.2018) and www.ycombinator.com/documents/ (called 20.04.2018).2 Id.3 See Edward Zimmerman, “The Damaging Shortcuts Entrepreneurs Take When Raising Money,” The Wall Street Journal (April 30, 2018) (“There is no doubt that SAFE and KISS documents will be faster and cheaper – when the deal is concluded for the first time. Unfortunately, over time, this is not the case. In FASAs, KISS documents and convertible notes, unresolved problems and problems that everyone goes down to secondary letters can often make the next fundraising effort more complicated and costly, which sometimes leads to negotiations detrimental to relationships at a time when the company is doing well.

« ). 4 For example, convertible bonds may be considered equity if the entity securitized by that debt is a start-up company and, at the time of the issue, it is unlikely that it will be able to repay the debt without a subsequent investment that would allow it: 5 See blog.ycombinator.com/announcing-the-safe-a-replacement-for-convertible-notes/ (called 20.0.2018) and www.ycombinator.com/documents/ (called 20.04.2018).6 See z.B. Roth Steel Tube Co. Comm`r, 58 A.F.T.R.2d 86-5808, 86-5811 (6. Cir. 1986), cert. Estate of Mixon v. United States, 30 A.F.T.R.2d 72-5094, 72-5098-99 (5. Cir.