Category: 3. Business

  • Convergent iridescence and divergent chemical signals in sympatric sister-species of Amazonian butterflies

    Convergent iridescence and divergent chemical signals in sympatric sister-species of Amazonian butterflies

    Numerous ecological interactions can impact trait evolution in closely-related species in sympatry, leading to trait convergence or divergence (terHorst et al., 2018). Closely-related species often display similar suites of traits because of their shared evolutionary history (Blomberg et al., 2003). Local selection can also act as a filter and prevent trait divergence (Keddy, 1992), therefore enhancing trait similarity between closely-related species when they occur in sympatry (Chazot et al., 2014). Trait similarity among sympatric species within a given ecological niche can thus stem from retention of locally adapted ancestral traits or from evolutionary convergence (Muschick et al., 2012). Selective pressures promoting the retention of locally adapted traits within species and/or trait convergence among sympatric species can also be due to local ecological interactions: for instance, shared predation pressure may promote the convergence of predator-deterrent traits in sympatry, but allow the trait to differentiate in allopatry (Mallet, 1999).

    However, when closely-related sympatric species share a given trait, either as a result of ancestry and/or convergence, they often diverge in other traits because (1) they may be partitioned in different ecological niches (Berlocher and Feder, 2002), or (2) as a result of character displacement due to reproductive interference (Grether et al., 2020) or reinforcement due to poor hybrid fitness (Butlin and Smadja, 2018). As a result, traits involved in sexual competition or mate choice tend to diverge significantly more often between species in sympatry compared to allopatry (Haavie et al., 2004; Marko, 2005).

    In this study, we investigate how ecological interactions in sympatry can constrain natural and sexual selection shaping trait evolution. We specifically focus on traits submitted to both natural and sexual selection and compare differences in these traits in allopatric vs. sympatric ranges. Theoretical and empirical studies have shown that sexual selection may favor the evolution of preferences for locally-adapted traits within species (Servedio, 2004; Servedio and Boughman, 2017; van Doorn et al., 2009). For instance, the predator-deterrent coloration of poison frogs is also detected and used as mating cues by females (Reynolds and Fitzpatrick, 2007). Similarly, habitat-dependent coloration of sympatric cichlid fish is also used as a visual cue for mate recognition (Seehausen et al., 2008). Yet, sexual interactions are likely to occur between individuals from closely-related species when they live in sympatry, and similar preferences for adaptive traits may thus result in substantial reproductive interference (Gröning and Hochkirch, 2008; Soni et al., 2025). Hybrids, when produced, can be unfit, thus favoring the evolution of sexual preferences for species-specific cues, rather than locally-adapted traits (Maisonneuve et al., 2024). To determine to what extent ecological interactions shape trait evolution, it is thus necessary to compare patterns of trait evolution in sympatry and allopatry: allopatric populations indeed allow us to estimate background levels of divergence or similarity that arise in the absence of direct ecological interactions (Pfennig and Pfennig, 2009). Comparing variations in adaptive traits in sympatric vs. allopatric populations of recently-diverged species and testing the sexual preference for those traits can shed light on the selective processes targeting traits modulating reproductive isolation and co-existence in sympatry.

    In butterflies, the evolution of wing color patterns can be influenced by both natural and sexual selection. The visual discrimination of wing color pattern can enable intraspecific recognition during courtship in many species (Costanzo and Monteiro, 2007; Li et al., 2017). However, the evolution of wing color patterns is also strongly influenced by the risk of detection and/or recognition by predators (Finkbeiner et al., 2014; Oliver et al., 2009). Whether these opposite selective pressures ultimately promote trait convergence or divergence in sympatric species might depend on their relatedness: for instance, a study in Papilionidae showed multiple color pattern convergences between distantly-related species living in sympatry, while divergent colorations are found in closely-related species (Puissant et al., 2023). Divergence in traits involved in species recognition could be favored because of higher reproductive interference in closely related species than in distantly related taxa (Pfennig and Pfennig, 2009). In sympatric species with chemical defenses, such as Heliconinii butterflies, local predation pressures tend to promote the convergence of similar conspicuous warning wing patterns compared to allopatric species (i.e. Müllerian mimicry, Joron et al., 1999; Merrill et al., 2014). But the costs associated with hybrid production, in turn, favor the evolution of alternative divergent mating cues in mimetic butterflies (Estrada and Jiggins, 2008), and divergence in male pheromone bouquets and female attraction has been found among mimetic sister species (González-Rojas et al., 2020). Similarly, the evolution of specific visual mate recognition signals, limiting reproductive interference but indistinguishable by predators, can also be promoted on the wings of mimetic butterflies (Llaurens et al., 2014).

    Here, we focus on the evolution of mating cues in the neotropical butterfly genus Morpho, where multiple closely-related species co-exist in sympatry (Blandin and Purser, 2013). In the Morpho species observed in the understory, striking iridescent blue coloration is displayed on the dorsal side of the wings, due to specific wing scale structures (Giraldo et al., 2016; Siddique et al., 2013). The light signal reflected by iridescent surfaces can be very directional, as hue and brightness of iridescent objects can drastically change depending on the light environment or the observer’s position (Doucet and Meadows, 2009). While the iridescent blue color is probably ancestral to the diversification of the understory clade (Chazot et al., 2021), the precise reflectance spectra at different angles likely differ among Morpho species. Directional iridescent signals generated in animals can likely enhance recognition by mates while remaining poorly detected by predators (Endler, 1992). In birds (Simpson and McGraw, 2019) and butterflies (White et al., 2015), the specific directional signal produced by the iridescent trait can be used as a cue during courtship, suggesting that the antagonistic sexual and natural selective pressures may finely tune the evolution of iridescent effects. How much sexual selection shapes the evolution of iridescent properties in sympatric Morpho species is currently unknown, but behavioral experiments carried out in the field in Amazonian Peru highlighted strong visually-based territorial interactions among males from sympatric species and limited species discrimination based on female coloration in males (Le Roy et al., 2021b).

    This raises questions on the key visual cues involved in mate choice, given that the iridescent blue coloration shared by closely-related species encountered within the understory is also likely under selection by predators. The iridescent bright blue dorsal coloration of Morpho wings contrasts with the brown and matte ventral side and generates a peculiar visual effect during flight. The combination of the blue flashes produced by the alternate exposure of the bright blue vs. brown sides of the wings during flapping flight, in addition to erratic flight trajectories, makes these Morpho very difficult to catch by bird predators (Young, 1971), potentially enhancing their evasive capabilities (Murali and Kodandaramaiah, 2020). Experimental trials with evasive prey have shown that predators learn to avoid prey they repeatedly fail to catch (Páez et al., 2021). The display of iridescent wings could thus be associated with a higher survival rate in nature because of both (i) direct effects, through successful escape of predator attacks, and (ii) indirect effects, by limiting predation attempts by birds recognizing the blue signals and refraining from attacking, as highlighted by butterfly release experiments investigating the hunting behavior of wild insectivorous birds in Brazil (Pinheiro et al., 2016). Mark recapture experiments in the field with manipulated dorsoventral contrasts in wild Morphos have suggested that dynamic flash coloration can reduce predation rate (Vieira‐Silva et al., 2024). This indirect effect could promote the evolution of convergent blue patterns in sympatric species, similar to the mimicry observed in species with chemical defenses (Joron et al., 1999; Merrill et al., 2014). In line with this hypothesis, repeated local convergence in the proportion of iridescent blue vs. black areas on the dorsal side of the wings has been documented in the sister-species Morpho helenor and Morpho achilles living in sympatry throughout the Amazonian basin (Llaurens et al., 2021). Precise quantification of variations in iridescence is now needed to assess the respective effects of selection by predators and mates that may drive convergent vs. divergent evolution of iridescence in sympatric and allopatric ranges.

    First, we quantified iridescence in allopatric vs. sympatric populations of M. helenor subspecies. Since coloration is expected to be more similar within than among species under neutral evolution, we used allopatric populations of M. helenor as a baseline to assess convergence of iridescence between two sympatric species (M. helenor and M. achilles). We then conducted behavioral experiments to test the effect of variation in iridescence on mate recognition, using two subspecies of M. helenor displaying different iridescent phenotypes. This intraspecific comparison allows identifying the visual cues used in mate choice in M. helenor, teasing apart the effects of iridescence and/or wing pattern. We then tested whether those visual cues are used in species recognition between sympatric M. helenor and M. achilles. Finally, we studied variations in the volatile compounds produced by wild males and females from sympatric populations of the two species to explore the evolution of potentially alternative traits, such as chemical cues, possibly acting as a reproductive barrier.

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  • Amazon sues AI startup over browser’s automated shopping and buying feature | Artificial intelligence (AI)

    Amazon sues AI startup over browser’s automated shopping and buying feature | Artificial intelligence (AI)

    Amazon sued a prominent artificial intelligence startup on Tuesday over a shopping feature in the company’s browser, which can automate placing orders for users. Amazon accused Perplexity AI of covertly accessing customer accounts and disguising AI activity as human browsing.

    “Perplexity’s misconduct must end,” Amazon’s lawyers wrote. “Perplexity is not allowed to go where it has been expressly told it cannot; that Perplexity’s trespass involves code rather than a lockpick makes it no less unlawful.”

    Perplexity, which has grown rapidly amid the boom in AI assistants, has previously rejected the US shopping company’s claims, accusing Amazon of using its market dominance to stifle competition.

    “Bullying is when large corporations use legal threats and intimidation to block innovation and make life worse for people,” the company wrote in a blogpost.

    The clash highlights an emerging debate over regulation of the growing use of AI agents, autonomous digital secretaries powered by AI, and their interaction with websites.

    In the suit, Amazon accused Perplexity of covertly accessing private Amazon customer accounts through its Comet browser and associated AI agent and of disguising automated activity as human browsing. Perplexity’s system posed security risks to customer data, Amazon alleged, and the startup had ignored repeated requests to stop.

    “Rather than be transparent, Perplexity has purposely configured its CometAI software to not identify the Comet AI agent’s activities in the Amazon Store,” it said.

    In the complaint, Amazon accused Perplexity’s Comet AI agent of degrading customers’ shopping experience and interfering with its ability to ensure customers who use the agent benefit from the tailored shopping experience Amazon curated over decades.

    Third-party apps making purchases for users should operate openly and respect businesses’ decisions on whether to participate, Amazon said in an earlier statement.

    Perplexity earlier said it had received a legal threat from Amazon demanding that it block the Comet AI agent from shopping on the platform, calling the move a broader threat to user choice and the future of AI assistants.

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    Perplexity is among many AI startups seeking to reorient the web browser around artificial intelligence, aiming to make it more autonomous and capable of handling everyday online activities, from drafting emails to completing purchases.

    Amazon is also developing similar tools, such as “Buy For Me”, which lets users shop across brands within its app, and Rufus, an AI assistant to recommend items and manage carts.

    The AI agent on Perplexity’s Comet browser acts as an assistant that can make purchases and comparisons for users. The startup said user credentials remain stored locally and never on its servers. The startup said users had the right to choose their own AI assistants, portraying Amazon’s move as an attempt to protect its business model.

    “Easier shopping means more transactions and happier customers,” Perplexity added. “But Amazon doesn’t care, they’re more interested in serving you ads.”

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  • Nearly Four Months After OBBBA, States’ Corporate Tax Conformity Patchwork Continues to Emerge

    By Kathryn Burns and Tom Cornett

    Multistate businesses continue to grapple in many states with uncertain conformity to Internal Revenue Code (IRC) corporate tax provisions following the OBBBA’s (P.L. 119-21, the 2025 federal Act formerly known as the One Big Beautiful Bill Act) July enactment. Amid lobbying from business interests and the significant state revenue implications of conformity, state responses vary widely.

    For example, Maryland, Rhode Island, and Virginia enacted provisions that proactively decouple from federal IRC amendments in either the current tax year, or the current and immediately succeeding tax years, while Maine granted its governor the authority to temporarily conform to federal IRC amendments contingent on legislative action. Other states, including California and Michigan, updated their IRC tie-in date during the 2025 tax year, while effectively decoupling from the OBBBA’s IRC amendments. Some state governors have asked legislatures to convene special sessions to address OBBBA conformity. Indiana Governor Mike Braun announced a special legislative session to consider conformity that convened this week, and, at the request of Delaware governor Matt Meyer, the Delaware General Assembly is slated to reconvene on November 13, in order to consider decoupling. Meanwhile, the Massachusetts Department of Revenue issued a draft technical information release (TIR) establishing the state’s approach based on pre-existing conformity provisions. Other states have addressed conformity piecemeal, issuing guidance on specific IRC provisions, while many state legislatures and taxing agencies have yet to act.

    For our Checkpoint News series on OBBBA conformity, Checkpoint Catalyst surveys the complexities of the emerging corporate tax compliance landscape and highlights relevant OBBBA state conformity legislation and guidance to date.

    The Labyrinth of Corporate Tax Conformity

    Most states base their corporate income tax calculations on federal taxable income, so that federal tax changes as of a specified date automatically flow through to the state tax base unless the state affirmatively decouples. States with “rolling” IRC conformity automatically adopt federal changes as they occur, while states with “fixed-date” conformity adopt the IRC as it existed on a specific date. Although most states generally conform by using the federal base as a starting point, most also selectively decouple from specific IRC provisions.

    The OBBBA’s enactment mid-year—after many states had established a conformity approach for the tax year—raises unique issues for states and businesses alike. The changes enacted by the law build on provisions of the Tax Cuts and Jobs Act of 2017 (TCJA), which shifted the U.S. tax system from a worldwide approach to a more territorial-based system, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020, which amended TCJA provisions to provide taxpayers temporary relief during the COVID pandemic. Even before the OBBBA, states selectively conformed to or decoupled from parts of the TCJA and CARES Act. The cumulative effect is a labyrinth of rules requiring state modifications to the federally determined base and separate state and federal tracking of depreciation, expense deductions, and various carryforwards.

    States that Proactively or Quickly Decoupled from the OBBBA’s IRC Changes

    Four states—Maine, Maryland, Rhode Island, and Virginia—anticipated federal changes and proactively enacted legislation to address conformity to new law before or immediately after the OBBBA became law. These states’ approaches are as notable for their differences as for their speed of implementation.

    Maine

    Maine, which currently has a general IRC conformity tie-in date of December 31, 2024, [Me. Rev. Stat. Ann. Title 36 § 5295.] took a unique approach by enacting legislation on June 17, 2025, [ME P.L. 2025 c. 336.] authorizing the Governor to temporarily adjust Maine income tax filing requirements when the Commissioner of Administrative and Financial Services determines that the legislature will not have the opportunity to conform or adjust Maine laws before tax returns begin to be processed for the most recently completed tax year. The Commissioner must report in writing to the Governor describing the federal income tax law changes and their potential effect on Maine income tax laws and the state budget. Based on this report, the Governor may direct the State Tax Assessor to temporarily adjust the state’s conformity to some or all of the federal changes, contingent on the Maine legislature’s subsequent enactment of conforming laws.

    In October 2025, Governor Janet Mills issued a conformity determination and directive to the State Tax Assessor addressing the OBBBA provisions for purposes of Maine corporate and individual income tax. [Determination and Direction of the Governor of the State of Maine, Maine Office of the Governor, 10/01/2025; Report on 2025 Conformity with Federal Tax Law Changes, Maine Dep’t. of Admin. and Financial Services, 09/30/2025; Troyer, Maine Provides Guidance Regarding OBBBA Conformity, Checkpoint News, 10/21/2025.] Based on various factors including budgetary impact, Governor Mills directed the State Tax Assessor to conform to various OBBBA provisions (including IRC § 163(j) business interest expense limitations and increased IRC § 179 expensing limits) for purposes of the 2025 tax year. The directive is contingent on subsequent legislative enactment. In the interim, the State Tax Assessor must process 2025 tax year income tax returns, accept payments, and issue refunds in accordance with the Governor’s conformity adjustments. If legislation is not subsequently enacted consistent with the Governor’s directive, taxpayers will be required to file amended tax returns, though they will not be subject to interest or penalty for underpayments related to any variance.

    Maryland

    Maryland’s pre-existing decoupling law requires the Comptroller, within 60 days of the enactment of an amendment to the IRC, to determine the impact changes will have on taxpayers and state revenue. [Md. Code Ann. Tax-Gen. § 10-108(b).] If the Comptroller finds that the impact on state revenue will be $5 million or more in the tax year that begins during the calendar year in which the IRC amendment is enacted, the amendment will not be effective for tax years beginning in the enactment year. [Md. Code Ann. Tax-Gen. § 10-108(a).] Regardless of revenue impact, IRC amendments become effective for tax years beginning in calendar years following the enactment year.

    In September 2025, the Maryland Comptroller issued its analysis determining that the OBBBA amendments to IRC § 174 (research and experimental expenses), IRC § 168(n) (qualified production property depreciation), and IRC § 163(j) (business interest deduction limitation) are expected to have a $5 million or greater impact on Maryland revenues.[Maryland Comptroller Releases Analysis of Federal Tax Changes, Maryland Comptroller, 09/05/2025.] Thus, these IRC amendments will not apply for Maryland tax purposes during the 2025 tax year. Decoupling from any OBBBA provisions in the 2026 and subsequent tax years, however, will require legislative action from the Maryland General Assembly.

    Rhode Island

    Rhode Island enacted decoupling legislation in June 2025. [L. 2025, H5076 (c. 278); Skornicki, Rhode Island Enacts Budget Bill Increasing Several Tax Rates, Expanding Net Income Definition, Setting Various Sunset Dates, Other Provisions, Checkpoint News, 07/28/2025] For tax years beginning on or before January 1, 2025, the law amends the definition of Rhode Island net income to require corporate taxpayers to modify federal taxable income by the amount of any income, deduction, or allowance that would be subject to federal income tax “but for the Congressional enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment.” [R.I. Gen. Laws § 44-11-11(a)(1)(viii).] As a result, for tax years beginning on or before January 1, 2025, Rhode Island does not conform to the amendments enacted by the OBBBA for purposes of calculating a corporation’s taxable net income, but without subsequent legislation or prior decoupling the state will conform for tax years beginning on or after January 2, 2025.

    Virginia

    Virginia’s approach to decoupling is more nuanced. In May 2025, Virginia amended its unique IRC decoupling provisions to provide that the state will not conform to any IRC amendments enacted on or after January 1, 2025, and before January 1, 2027, unless the Virginia legislature subsequently adopts specific IRC amendments or an IRC amendment extends the expiration date of an IRC provision to which Virginia already conforms or has previously conformed. [Va. Code Ann. § 58.1-301(B)(11)(a), as amended by L. 2025, H1600 (c. 725); Helmes, Virginia Budget Extends Pass-Through Entity Tax Election, Increases Standard Deduction, Provides $200 Rebate, Among Other Changes, Checkpoint News, 05/07/2025.] This rule replaces Virginia’s previous threshold-based approach, which provided for nonconformity only when IRC amendments were projected to impact Virginia general fund revenues by more than specified amounts ($15 million for any specific individual amendments or $75 million cumulatively).

    States That Updated Conformity Dates After Enactment of the OBBBA

    Both California and Michigan updated their IRC conformity dates after enactment of the OBBBA, while effectively avoiding conformity to the federal changes.

    California

    In October 2025, after 10 years of conformity to the IRC as in effect on January 1, 2015, the California legislature enacted legislation conforming its corporate and personal income tax laws to the IRC as it existed on January 1, 2025, effective for tax years beginning on or after January 1, 2025. Because this revised conformity date would have conformed California tax laws to amendments previously enacted by the TCJA and the CARES Act (to which California had not previously conformed), the California law also decoupled from numerous IRC provisions to maintain California’s historic nonconformity to those earlier federal changes. [Cal. Rev. & Tax. Cd. § 17024.5(a)(1)(Q); Cal. Rev. & Tax. Cd. § 23051.5(a)(1).] The revised conformity date ensures nonconformity to the OBBBA provisions, which were enacted after January 1, 2025.

    Michigan

    Michigan amended its IRC conformity date for both corporate and individual income tax purposes to the IRC as of January 1, 2025, or, at the taxpayer’s option, the IRC in effect for the tax year. Because most taxpayers elect to conform to the IRC as in effect for the tax year, changes resulting from the OBBBA (effective January 1, 2025) are generally applicable for Michigan corporate and individual income tax purposes. However, for tax years beginning on or after January 1, 2025, the enacted Michigan legislation includes various decoupling provisions requiring taxpayers to modify the computation specified in certain IRC provisions, including IRC § 168(k) (bonus depreciation), IRC § 179 (expensing), and IRC § 163(j) (business interest expense limitations). The Michigan Department of Treasury also advised taxpayers that due to the shifting legal landscape and the OBBBA’s changes to the federal state and local tax deduction limits, the state will provide limited relief to flow-through entities that made their first binding election to pay tax at the entity level prior to the enactment of the OBBBA. These flow-through entities can invalidate the election by requesting a refund of the taxes paid to make the election, provided their annual flow-through entity tax return has not been filed. [Notice Regarding Flow-Through Entity Tax Election Relief in Light of Pub. L. 119-21, One Big Beautiful Bill Act (OB3), Michigan Department of Treasury, 09/23/2025 [last updated].]

    States That Updated Their General Conformity Dates in 2025 Before Enactment of the OBBBA

    Ten states (Arizona, Florida, Georgia, Hawaii, Idaho, Kentucky, South Carolina, South Dakota, Vermont, and West Virginia) updated their general IRC conformity dates in 2025 before enactment of the 2025 Act. With the exception of Florida, and without future legislation, all of these states are decoupled from the OBBBA amendments because their adopted conformity dates predate enactment of the OBBBA.

    STATES UPDATING IRC CONFORMITY BEFORE OBBBA ENACTMENT THAT EFFECTIVELY DECOUPLE

    • Arizona – For tax years beginning after December 31, 2024, conforms to Internal Revenue Code in effect on January 1, 2025, excluding changes enacted after January 1, 2025 [Ariz. Rev. Stat. Ann. § 42-1001(8), as amended by L. 2025, H2688; Ariz. Rev. Stat. Ann. § 43-105(A).]
    • Georgia – For tax years beginning on or after January 1, 2025, conforms to the IRC as of December 31, 2024 [Ga. Code Ann. § 48-1-2(14), as amended by L. 2025, H290.]
    • Hawaii – For tax years beginning on or after January 1, 2025, conforms to the IRC as of December 31, 2024 [Haw. Rev. Stat. § 235-2.3(a), as amended by L. 2025, S1464 (Act 123).]
    • Idaho – Effective January 1, 2025, conforms to the IRC as in effect on January 1, 2025, and does not incorporate the OBBBA amendments [Idaho Code § 63-3004, as amended by L. 2025, H1, effective 01/01/2025.]
    • Kentucky – Effective June 27, 2025, and applicable to tax years beginning on or after January 1, 2025, conforms to the IRC in effect on December 31, 2024, and does not conform to the OBBBA amendments. [KY. Rev. Stat. Ann. § 141.010(21); L. 2025, HB775, §30.]
    • South Carolina – Effective May 22, 2025, conforms to the IRC as amended through December 31, 2024 (including sections that expired on December 31, 2024, but were not otherwise amended during 2025), and does not conform to the OBBBA amendments. [S.C. Code Ann. § 12-6-40(A)(1), L. 2025, Act 63, §1.]
    • South Dakota – Effective February 18, 2025, for purposes of the banks and financial institutions tax, conforms to the IRC as in effect on January 1, 2025 [S.D. Codified Laws §10-1-47, as amended by L. 2025, HB1028 §1.]
    • Vermont – Enacted on May 21, 2025, retroactively effective to January 1, 2025, and applicable to tax years beginning on and after January 1, 2024, conforms to the Internal Revenue Code in effect on December 31, 2024 [Vt. Stat. Ann. Title 21 §5824. as amended by L. 2025, H493, § E.111.]
    • West Virginia – Effective February 17, 2025, and retroactively applicable to tax years beginning on or after January 1, 2025, conforms to the Internal Revenue Code as amended through December 31, 2024 [W. Va. Code §11-24-3(a), as amended by WV L. 2025, c. 2.]

    Florida

    Florida amended its IRC conformity provisions in June 2025, retroactively applicable to January 1, 2025, to conform to the IRC as amended and in effect on January 1, 2025, with the exception that any future amendment to the IRC must be given effect for Florida tax purposes in the manner and for the periods prescribed in the IRC, to the extent that the amended provision of the IRC is taken into account in the computation of taxable net income. [Fla. Stat. § 220.03(1)(n), as amended by FL L. 2025, c. 25-208, §§60, 62; Fla. Stat. § 220.03(3).] Florida has historically updated its fixed date conformity to the current tax year to generally conform to federal amendments but selectively decouples from various provisions. [Fla. Stat. § 220.03(1)(n), as amended by FL L. 2025, c. 25-208, §§60, 62; Fla. Stat. § 220.03(3); Fla. Stat. § 220.13.] Taxpayers should monitor Florida legislative action with respect to the OBBBA provisions.

    However, in response to an inquiry from Checkpoint Catalyst, a Florida Department of Revenue representative observed that although Florida has “adopted the Internal Revenue Code as of January 1, 2025,” Florida law “does not address the OBBBA, which became effective after the 2025 Florida legislative session ended. The Florida Legislature will have the opportunity to consider the OBBBA amendments to the Internal Revenue Code during the next legislative session, which is scheduled to begin January 13, 2026.” [Email from Florida Department of Revenue to Checkpoint Catalyst, on file with Checkpoint Catalyst, 11/04/2025.]

    States That Have Issued Guidance Following the OBBBA

    Massachusetts summary

    The Massachusetts Department of Revenue issued a draft technical information release (TIR) listing 52 of the OBBBA’s provisions that the Department determined to principally affect federal gross income or federal deductions and, because Massachusetts’s IRC conformity provisions under the individual income tax and the corporate excise tax differ, the draft TIR indicates separately for income tax and corporate excise tax purposes whether the state conforms to those provisions. [Technical Information Release Working Draft TIR: Massachusetts Tax Conformity to Certain Provisions in Public Law No. 119-21, Massachusetts Department of Revenue, 10/20/2025; Nosce, Massachusetts Issues Draft Conformity to OBBBA Provisions, Checkpoint News, 10/27/2025.] Although Massachusetts conforms to many of the OBBBA provisions for corporate tax purposes, the state does decouple from other provisions based on the state’s pre-existing conformity scheme, which is tied to the IRC as currently in effect for the 2025 tax year. The Department is likely to provide further guidance in the final version of the release.

    Other states may choose to address conformity to specific sections of the Internal Revenue Code as amended by the OBBBA. For example, in September 2025, the Alabama Department of Revenue issued guidance reaffirming its nonconformity to TCJA amendments to IRC §174 for expenditures incurred on or after January 1, 2024. [Research and Experimental Expenditures, Alabama Department of Revenue Notice, 09/11/2025; Del Bene, Alabama Issues Guidance on Research/Experimental Expenditures Following Enactment of OBBBAA, Checkpoint News, 09/16/2025.]

    States Lacking Explicit Guidance After the OBBBA

    Many major states, such as Illinois and New York, have yet to explicitly address their approach to the OBBBA’s IRC amendments. To some degree, existing law dictates a clear outcome. For example, Illinois decouples from the bonus depreciation provisions of IRC § 163(k) for tax years ending on or after December 31, 2021, [ILCS Chapter 35 § 5/203(b)(2)(T)(3)(iii)] and also decouples from IRC § 168(k). [N.Y. Tax Law § 208(9)(b)(17).] However, the OBBBA amendments raise unique questions and issues that these states will need to grapple with in the months and years to come.

    Implications for Taxpayers and Practitioners

    The divergent state approaches to IRC conformity and the varied methods by which state tax agencies issue guidance on OBBBA amendments create significant challenges for taxpayers attempting to monitor changes and engage in proactive tax planning.

    In navigating this multistate compliance complexity, key considerations for corporate taxpayers include:

    Tracking Requirements: Taxpayers will need to maintain separate depreciation schedules, expense deduction calculations, and business interest expense limitation computations for federal and various state purposes, adding to the existing complexity created by state conformity variations related to the TCJA and CARES Act.

    Estimated Tax Payments: Taxpayers should carefully evaluate their state estimated tax obligations in light of potential differences between federal and state taxable income calculations resulting from conformity variations.

    Planning Opportunities: Taxpayers with operations in multiple states should be alert for planning opportunities generated by the emerging conformity patchwork, including considerations around asset placement and timing of deductions.

    Documentation: Taxpayers should maintain detailed documentation supporting their conformity positions, particularly in states like Maine where temporary administrative guidance may not ultimately be codified legislatively.

    As states continue to grapple with the revenue implications of the 2025 Act, additional guidance and legislative action should be expected. Tax professionals should remain vigilant in tracking state-level developments and advising clients on the compliance and planning implications of this latest round of federal tax reform.

    Checkpoint resources. Checkpoint Catalyst breaks down the nuances of each state’s approach to conformity in the following topics:

    Catalyst Topic # 305:1000 State Treatment of the Limitation on Deduction of Business Interest Under IRC § 163(j)

    Catalyst Topic # 402:1000 State Tax Treatment of Depreciation

    Catalyst Topic # 403:1000 State Treatment of Expensing and Bonus Depreciation

    Catalyst Topic # 1003:050 State IRC Conformity

    Several State Charts briefly capture each state’s approach to the relevant OBBBA amendments:

    • State Follows IRC § 163(j)—The 2025 Act (OBBB)
    • State Follows IRC § 174A—The 2025 Act (OBBB)
    • SALT Deduction Cap Workaround
    • State Follows Bonus Depreciation—The 2025 Act (OBBB)
    • State Follows Bonus Depreciation—The 2025 Act (OBBB)
    • State Follows IRC § 179— The 2025 Act (OBBB)
    • State Follows IRC § 179— The 2025 Act (OBBB)

     

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  • Kirkland Advises Carlyle on DPLTA with SNP | News

    Following Carlyle’s voluntary public takeover offer for SNP, Kirkland & Ellis advised Carlyle on entering into a domination and profit and loss transfer agreement (DPLTA) to establish control of SNP Schneider-Neureither & Partner SE (SNP). The DPLTA will become effective on January 1, 2026.

    SNP, headquartered in Heidelberg, is a global technology platform leader and trusted partner for companies seeking data-enabled transformation capabilities and business agility. The company works with more than 3,000 customers of all sizes and in all industries in 80 countries and has around 1,600 employees worldwide.

    Kirkland & Ellis also advised Carlyle on the voluntary public takeover offer for all outstanding shares of SNP, which was completed in April 2025.

    The Kirkland team included corporate lawyers Achim Herfs, Thomas Hornberger, Florian Sippel and Sabrina Seitz.

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  • Kirkland Advises CBC Group-Backed NovaBridge Biosciences on Acquisition of VIS-101 | News

    Kirkland & Ellis advised CBC Group-backed NovaBridge Biosciences (Nasdaq: NBP, formally known as I-Mab) on its acquisition of VIS-101, a novel bifunctional biologic targeting VEGF-A and ANG2. This transaction was closed on October 20, 2025, representing another successful practice of leading biotech companies using the NewCo model to acquire high-potential drug assets.

    NovaBridge Biosciences was rebranded from I-Mab, following the launch of its new model business model reflecting strategic transition to a global biotech platform. Leveraging CBC Group’s rich resources and global capabilities, NovaBridge Biosciences collaborates with world-leading innovators to select high-potential drug assets and accelerate their access to global patients. NovaBridge Biosciences advances the most promising innovative drugs across multiple therapeutic fields by establishing satellite subsidiaries focused on specific therapeutic areas or assets.

    VIS-101 is a novel bispecific molecule targeting VEGF-A and ANG2. It is a more potent molecule that could potentially provide more durable treatment benefits for patients with wet AMD, DME and retinal vein occlusion (RVO) than current standard of care. VIS-101 has completed initial safety and dose-escalation studies in both the US and China, and is currently undergoing a Phase 2 study in China. VIS-101 is anticipated to enter into a Phase 3 study in 2026.

    The acquisition was completed by a newly formed subsidiary Visara, a clinical-stage biopharmaceutical company focusing on the development of best-in-class ophthalmic therapeutics, launched with an approximately $37M capital infusion from NovaBridge Biosciences and the contribution by AffaMed Therapeutics (HK) Limited of its rights to develop, commercialize and otherwise exploit VIS-101. Upon completion, NovaBridge Biosciences is the majority shareholder of Visara, and Visara controls global rights to VS-101. NovaBridge Biosciences has also signed a separate assignment agreement with Everest Medicines (HKEX: 1952) pursuant to which Visara has assigned Everest the right to develop, commercialize and otherwise exploit VIS-101 in Singapore, Thailand, Malaysia, Indonesia, Vietnam, China, Korea and India.

    The Kirkland team included corporate lawyers Mengyu Lu, Jiayi Wang, Justin Zhou, Ryan Choi, Yuchen Han, Louis Zhou and Rock Liu.

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  • Drax power plant to go on earning ‘over £1m a day’ from burning wood pellets | Drax

    Drax power plant to go on earning ‘over £1m a day’ from burning wood pellets | Drax

    Britain’s biggest power plant will continue to earn more than £1m a day from burning wood pellets under a new government subsidy contract designed to halve its financial support, according to analysts.

    The Drax power plant in North Yorkshire is in line to earn £458.6m a year between 2027 and 2031 after the government agreed to extend its subsidies beyond 2026, according to analysts at Ember, a climate thinktank.

    The earnings are well below the £869m in subsidies handed to the Drax power plant last year for generating about 5% of the UK’s electricity from burning biomass after the government promised to curb the use of biomass in Britain’s power system.

    Under the new contract, Drax will be paid to run just over a quarter of the time, down sharply from almost two-thirds of time currently. But the price it will earn for each unit of electricity generated will rise.

    Officials have offered the power plant a guaranteed price of £157.50 for every megawatt-hour of electricity it generates between 2027 and 2031, in today’s prices, which could be higher with inflation.

    This would be higher than the current price of £142.24/MWh earned by the power plant, and double the current wholesale market price of electricity bought in advance, which is just over £78/MWh.

    When the deal was agreed in February, the energy minister, Michael Shanks, said the company’s subsidies had been cut because it “simply did not deliver a good enough deal for bill payers and enabled Drax to make unacceptably large profits”.

    Under the terms of the new contract, the company will have to switch to using 100% woody biomass from sustainable sources, up from the current level of 70%. The government threatened “substantial penalties” if Drax does not comply.

    Will Gardiner, the chief executive of Drax, said: “We are pleased to have agreed this new contract with the UK government, which will support UK energy security into the 2030s and deliver a net saving for consumers compared with alternative sources of dispatchable generation.

    “The agreement will support the rollout of intermittent renewable generation across the UK and provides options to ensure Drax Power Station continues to play a long-term role in the regional economy and UK energy system,” Gardiner said.

    The company claims that independent analysis, undertaken by consultants at Baringa, found that the deal will deliver savings of up to £3.1bn over the four-year term by avoiding the need to produce extra power generation capacity, and reducing the UK reliance on gas and interconnectors.

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    Josie Murdoch, an analyst at Ember, said: “Although this new deal means Drax generation and subsidies will fall, the deal will still see substantial subsidies handed out to Drax every day, all while Drax remains the largest emitting power station in the UK.”

    Electricity generated from biomass is defined as carbon neutral in the UK’s carbon budgets but Ember has claimed that the power plant’s actual emissions are more than the next six most polluting power plants in the UK combined. The findings were dismissed by Drax as “flawed” and the company accused its authors of ignoring its “widely accepted and internationally recognised approach to carbon accounting”.

    Earlier this year, the FCA, the City watchdog, began an investigation into Drax over “historical statements” made about the sourcing of wood pellets to examine whether the company had complied with disclosure and transparency rules.

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  • Central banks need modern supervision tools for the stablecoin era

    Central banks need modern supervision tools for the stablecoin era

    As tokenised finance accelerates globally, central banks face a critical blind spot. While considerable effort has been invested in crafting regulatory frameworks for virtual asset service providers, far less attention has been paid to the supervisory infrastructure needed to enforce these rules. This gap threatens to undermine even the most proportionate regulatory regimes and the threat is particularly acute in emerging markets where dollar-backed stablecoins are reshaping monetary dynamics at unprecedented speed.

    Analysis from the Cambridge Centre for Alternative Finance identifies this challenge as part of a widening ‘innovation delta’ – the gap between regulators’ capacity to supervise financial innovation and the rate of innovation itself. Among the delta’s four manifestations, the temporal mismatch proves most acute for supervision: most regulatory reporting relies on quarterly figures while tokenised finance moves in seconds.

    The temporal mismatch and visibility problem

    Traditional financial supervision operates on periodic reporting cycles designed for an analogue world. Banks submit quarterly returns, regulators conduct annual examinations and supervisory responses unfold over months. This temporal architecture fundamentally mismatches the operational reality of tokenised finance, where stablecoin transactions settle instantly and cross-border flows operate around the clock.

    Global stablecoin transaction volumes exceeded $15tn in 2024. To give context, this matches Visa’s throughput. Yet unlike Visa, stablecoin flows often remain opaque to central banks unless they employ modern supervision technology. For central banks whose currency is not among the G7, this widening innovation delta coupled with expanding adoption of dollar-backed stablecoins poses an existential threat. The increasing use of dollar stablecoins transcends mere payments innovation; it represents a fundamental challenge to monetary sovereignty and the central bank’s ability to guide monetary policy.

    The temporal gap creates a particularly acute problem: the loss of necessary visibility into foreign exchange flows. Rapid growth in the stablecoin market – dollar-denominated stablecoins comprise over 80% of the $200bn global market – is bypassing traditional banking oversight, rendering quarterly reports outdated and hindering central banks’ ability to manage exchange rates, assess external vulnerabilities and enforce capital controls.

    Concern for the erosion of monetary control

    In countries experiencing high inflation or currency instability, residents increasingly use dollar stablecoins as stores of value. Without modern supervisory technology and infrastructure, episodes of currency volatility can trigger large-scale capital flight that remains invisible to central banks. Central banks need visibility into these flows to understand their scale, velocity and impact on foreign exchange markets and monetary aggregates.

    Nigeria provides a fitting example. In 2024,  20% of Nigerian residents reported that stablecoins account for more than half of their total portfolio, catalysed primarily by desire to access dollars given stringent capital controls. This represents capital flight operating at scale through channels that traditional supervisory tools cannot adequately monitor. In Pakistan, which receives $35bn in formal remittances, stablecoins are increasingly replacing traditional systems. The trends are evident: formal remittances fell from $31.3bn to $27bn in 2023 as flows shifted to unmonitored channels.

    This is the crux of a fundamental concern for central bankers: stablecoin adoption and associated dollarisation risk could undermine monetary policy transmission and erode domestic bank deposits. Consider a central bank facing inflationary pressure that raises interest rates to tighten monetary conditions. Traditional monetary policy assumes this will reduce money supply growth and dampen demand. But without proper visibility into stablecoin conversions, the central bank cannot observe whether residents are shifting local currency deposits into dollar stablecoins or using another coping mechanism. By the time quarterly reports reveal the scale of these flows, the policy intervention window has closed. The money hasn’t left the economy. It has moved faster than the central bank’s capacity to take effective policy decisions.

    Building supervisory infrastructure for modern markets

    The solution is not prohibition – such bans have proven ineffective and counterproductive – but rather adopting suptech tools that provide visibility into regulated virtual asset activity and stablecoin flows. These tools cannot exist in isolation. They require analytical capability that combines on-chain monitoring with traditional finance surveillance and translates on-chain volumes into meaningful economic signals. Effective supervision demands a comprehensive platform that will integrate data spanning traditional and tokenised finance. What is the dollar-denominated stablecoin value held domestically? What is the velocity of domestic stablecoin holdings compared to traditional foreign exchange reserves? What proportion of remittance flows now occur through stablecoin rails?

    Central banks can draw lessons from the fintech industry and leverage the properties of blockchain. Traditional payment providers are integrating stablecoin rails, creating hybrid systems that combine blockchain settlement speed with regulatory clarity. Blockchain-based proof-of-reserve systems shift supervision from periodic checking to continuous monitoring. Cross-chain interoperability protocols aggregate supervisory data, addressing the challenge that stablecoins pose as they operate across multiple blockchain networks.

    Urgency of adoption

    Suptech development must begin early in the regulatory process, not as an afterthought. Every quarter that central banks lack real-time visibility into stablecoin flows represents a quarter where financial stability risks accumulate unobserved and capital controls develop leakages. For emerging markets, delay compounds these costs and creates adverse selection in regulatory compliance.

    Authorities need robust mechanisms for real-time sharing of supervisory information, particularly for the borderless nature of virtual assets and systemic risks. The challenge extends beyond national borders. Cross-border stablecoin flows that appear innocuous in one country may reveal significant patterns when aggregated. Both the Financial Stability Board and the International Organization of Securities Commissions identify cross-border co-operation as critical for effective virtual assets supervision. In their respective reports published in 2025, IOSCO emphasises the need for information sharing across the regulatory lifecycle, including during authorisation, supervision and enforcement stages. The FSB found that gaps in data quality and limited regulatory reporting by VASPs hinder effective monitoring of financial stability risks.

    These concerning weaknesses in implementing FSB Recommendation 3 underscore the urgency for cross-border co-operation in supervision. The value of supervisory data increases substantially when multiple jurisdictions adopt compatible systems. Enhanced international coordination is essential to implement consistent oversight and address regulatory arbitrage risks.

    As the CCAF notes in its analysis, without system-level innovation, the innovation delta will continue widening, creating space for regulatory arbitrage, jeopardising consumer protection, inducing financial instability and weakening public trust. For central banks, modern on-chain supervision tools are not merely an efficiency improvement but a necessity for fulfilling their mandates and for emerging markets, maintaining monetary sovereignty.

    Modern finance requires modern supervision. Hopefully it will mitigate a modern financial crisis.

    Jill Shemin is Head of Policy at EMTECH.

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  • SML on the investment of FountainVest and CPE in SML Group

    SML on the investment of FountainVest and CPE in SML Group

    Slaughter and May Hong Kong advised SML on the investment in SML Group by private equity firms FountainVest and CPE.

    SML Group is a global leader in apparel brand solutions and radio frequency identification (RFID) tags business, with over 40 years of history. Headquartered in Hong Kong, SML Group operates in over 20 countries and partners with over 600 leading brands worldwide.

    Corporate

    Darren Yang / Seconded Trainee, Anson Chan / Trainee

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  • Honda Unveils Next-generation Technologies at “Honda Automotive Technology Workshop” for Electrified Models to be Launched in Second Half of 2020s

    Honda Unveils Next-generation Technologies at “Honda Automotive Technology Workshop” for Electrified Models to be Launched in Second Half of 2020s

    Honda positions the “environment” and “safety” as priority issues that need to be addressed in order for Honda to continue offering the joy and freedom of mobility to people in a sustainable manner. Based on this belief, Honda has set ambitious goals of achieving “carbon neutrality for all of its products and corporate activities” and “zero fatalities from traffic collisions involving Honda motorcycles and automobiles,” globally by 2050.

    As announced at the 2025 Honda Business Briefing held in May of this year, Honda is working to further strengthen the competitiveness of its electric vehicles (EV) and hybrid-electric vehicles (HEV) and offer new value to customers through electrification and enhanced application of intelligent technologies.

    In the meantime, Honda will continue to pursue its value proposition in the electrified era: the “joy of driving” experienced by the driver while driving with a sense of oneness with their vehicle.　Regardless of powertrain type, EV or HEV, Honda will continue to build its products based on the Honda M/M Concept*1, a human-centric approach to Honda car design, and pursue the “joy of driving,” offering comfort and fun not only to the driver but to all occupants.

    Under the concept of “Enjoy the Drive” which represents the value proposition of Honda automobile products, which is centered on the M/M Concept and the “joy of driving,” Honda will remain committed to making steady advancements of next-generation automotive technologies. At the workshop, Honda unveiled new technologies being developed to embody the unique approach and value system of Honda. 

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  • Institutional Investors Call for SEC Action on Non-GAAP Compensation, Proxy Voting

    As the Securities and Exchange Commission (SEC) sets its next short-term agenda, the Council of Institutional Investors (CII) has highlighted three categories of rulemaking priorities that the commission should consider: executive compensation transparency with non-GAAP reconciliation, proxy vote reliability, and proxy vote transparency.

    The chair of the regulatory agency sets its agenda, and it is updated twice a year. The initial priorities of SEC Chair Paul Atkins were unveiled in September, with projects aimed at simplifying or scaling back rules to promote capital formation and expanding access to different types of investments for retail investors.

    In particular, the CII requested that the SEC address two of its three priorities under a rulemaking project called rationalization of disclosure practices and restore a former project on proxy process amendments to address its third priority.

    For the disclosure rationalization project, the SEC staff is drafting recommended proposed amendments—for the commissioners to consider—that would facilitate material disclosure by companies and shareholders’ access to the information. The commission had targeted a proposal in the spring of 2026, but it is likely to be delayed given the ongoing government shutdown that began on October 1, 2025. During a lapse in funding, the SEC does not engage in non-emergency rulemaking. It is unclear when the shutdown will end at this juncture.

    Executive Compensation and Non-GAAP Reconciliation

    This is not a new request. The CII first filed a rulemaking petition in 2019, asking the SEC to close a loophole in regulations governing public companies’ use of financial measures based on something other than GAAP to determine executive compensation.

    The investor group has since continued to advocate for action, but both former chairs Jay Clayton and Gary Gensler did not put the item on the rulemaking agenda as the agency in part had numerous other priorities.

    In particular, the CII is calling for a rule that would improve the presentation of non-GAAP measures in the proxy statement’s Compensation Discussion and Analysis (CD&A). A wide variety of performance metrics used for executive pay are often based on non-GAAP adjusted measures that are not reconciled to GAAP, which can be misleading.

    While there are rules on the use of non-GAAP measures, they do not apply to the target measures for compensation in CD&A–an important source of information for investors when evaluating executive pay.

    The CII believes the SEC should require companies to reconcile the non-GAAP measures used for executive pay to GAAP and provide a narrative description of why these non-GAAP financial measures are more appropriate than GAAP figures.

    This is especially important because many large public companies disclose adjusted earnings or other financial measures that do not follow official GAAP.

    The CII represents employee benefit funds, foundations, and endowments with $5 trillion in combined assets under management.

    The group cited research showing a vast majority of large companies use non-GAAP figures, but they do so largely because these numbers show better performance than under comparable official GAAP reporting.

    “And, importantly, many of these same companies use non-GAAP earnings as a key criterion in setting executive compensation,” CII General Counsel Jeffrey Mahoney wrote on October 22.

    Class-by-Class Vote Results

    As for the projects related to corporate governance, CII emphasized the importance of the principle of one share, one vote.

    In the last two decades, companies like Alphabet and Meta have set up dual- or triple-class capital structures with unequal voting rights.

    “Often over time, this founder-knows-best approach presents increasing risk to long-term investors by entrenching management and blindsiding executives to the need for change,” Mahoney wrote. “That lack of accountability at the top can also harm corporate culture and the community at large.”

    CII’s policies state that that companies with dual-class stock structures should incorporate time-based sunset provisions in their governing documents to convert to one-share, one-vote within seven years of an initial public offering (IPO) unless all classes of shareholders, voting on a one-share, one-vote basis, periodically approve keeping the dual-class structure.

    The CII requested that the SEC consider including a provision in the disclosure rationalization project that would improve the transparency of the voting results at multi-class companies.

    End-to-End Vote Confirmation

    The investor advocate said that a proxy voting system should provide end-to-end confirmation so that both companies and shareowners can be assured that votes were properly cast and included in the final tally as instructed.

    CII is working together with the Society for Corporate Governance to ensure that the various intermediaries in the voting chain ensure that beneficial shareholders can confirm that their votes in contested director elections were counted correctly.

    At the same time, CII said that the SEC should monitor the progress being made in end-to-end vote confirmation and consider proposals when necessary.

    Mahoney flagged a solution offered by former SEC Commissioner Allison Herren who suggested that “all participants in the voting chain to grant to issuers, or their transfer agents or vote tabulators, access to certain information relating to voting records, for the limited purpose of enabling a shareholder or securities intermediary to confirm how a particular shareholder’s shares were voted.”

     

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