Same-sex relationships and angel investing

Encouraging to see the US Treasury Department and the Internal Revenue Service rule "that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes."

"However," the government press release goes on to state, "the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law."


We took a different approach for For purposes of ending discrimination against gay, lesbian and transgender persons in the rule set for angel investing in the United States, we propose that domestic partnerships, civil unions, and similar relationships recognized by state law should count. 

Here's the regulatory recommendation submitted today to the SEC by

A spouse of a natural person shall mean another person, regardless of gender or sexual orientation, whose relationship with the person specified: (1) may be characterized as such person's (i) husband, (ii) wife, (iii) spouse, (iv) domestic partner, or (v) designated beneficiary under any applicable state law for the purpose of ensuring that each person in a two-person relationship has certain rights or financial protections based upon such designation; or (2) is that of the other party to a civil union with such person.

The recommendation is part of a comment letter signed by 58 people who are, in the words of the petition, "business persons; members of angel groups, trade associations and advocacy groups; partners and associates of venture capital funds; startup founders; individual angel investors; and other persons interested in the health and vibrancy of America's startup ecosystem."

The comment letter has been submitted in connection with the SEC's open call for public comment on changes to Regulation D, which is the foundational rule set for the startup financing ecosystem in the United States.

One thing the petition might have done, but didn't, was cover the point covered in the Treasury/IRS ruling - namely, that a valid marriage for purposes of the accredited investor definition stands up, regardless of the law in the jurisdiction in which the given investor resides. But I am glad we chose to say that civil unions, domestic partnerships, and similar relationships should count.

I'll update this post when the comment letter is posted to the SEC site. It usually takes a few days.

Update 09/05: the letter is up on the SEC site already! Here is the link.

Photo: King County, WA / Flickr.

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