Brokers: do you pay taxes when rolling your fee into a deal?
If you are owed a $1mm fee for procuring the debt, can you roll $1mm into the deal as equity or are you paid and have to invest the after tax?
If you are owed a $1mm fee for procuring the debt, can you roll $1mm into the deal as equity or are you paid and have to invest the after tax?
Career Resources
You can roll it, you’d want it up front, but your dev fee can be baked into your S&U, and you can also have a deferred developer fee that gets paid out in cash flow
I'm the broker. So no Dev fee. I want to roll my debt fee in as equity.
I am not a broker but it seems highly unlikely. That is ordinary income
Yes, this is done every day. Hell I do this in every capital raise/debt raise I do.
And do you roll the full value or pay taxes first?
This depends on how the fee agreement is structured. It can be done either way.
To clarify:
I am asking the sponsor if I can invest my fee owed for procuring the debt into their deal as equity.
So investing the $1mm fee as an LP in their deal instead of getting it paid at close and paying taxes on it.
You can, but generally need to be a memeber of the GP group. If you invest as a pure LP you will need to proportion at least part of the taxes. How I do this is to become part of the GP and take an active role in the group as an investor relations member. Do note, that I structure debt and equity for deals so it is different than pure debt structuring.
Et ratione et magnam libero. Distinctio cumque cum ratione vero unde. Est sapiente quia mollitia. Aut quaerat incidunt cumque asperiores voluptas. Tempore quia aspernatur quas facere nihil doloribus.
Enim et totam non ea sed est quos. Et aut commodi quidem ea porro. Facilis unde officiis ea iste nulla consequuntur. Ut eius esse dolorum.
Iusto assumenda aut mollitia sit excepturi nemo et ipsum. Voluptatem et quia tempore repudiandae quia incidunt voluptates consequatur. Rem suscipit earum odit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...