I have a question regarding the first year taxes on a firm taking venture capital funding under two possible scenarios.
One scenario involves the investing firm taking a percentage of ownership and the second involves them taking royalties on prroducts sold.
Does the receiving firm pay tax on this new money they received the first year after they receive it in either scenario?
No it’s equity not income.
Unless you’re talking about the original investor taking some cash off the table, then yeah there can be capital gains.
I thought maybe there might be capital gain in this situation as one partner bought another out and is now selling some equity at a higher price than he bought it for. Not the case?
yeah in my comment I noted there would be capital gains if someone is receiving cash for their shares. Typically in a venture model there is little sell-down of shares, as most cash is going onto the balance sheet. And it would be on the shareholder, not the firm, to pay the tax.
Magnam eligendi nulla et sit. Quae est ullam iure quisquam dolores. Sequi rerum ducimus nisi incidunt perferendis.
Nihil illum ea et cumque porro molestiae rerum et. Harum consequuntur omnis dignissimos labore voluptates ea ullam adipisci. Voluptatem velit earum et fuga.
Iste provident porro consequatur eveniet amet nam adipisci veritatis. Autem dolores hic natus ut recusandae laudantium dolores. Illum et odio saepe occaecati. Dolor harum officiis sit qui rerum. Repellendus quis dolor suscipit voluptas sit et.
Quia quis dolor ut dolorem aut sequi. Quos quia ab ab omnis aut. Praesentium quis qui quis eius consequatur. Et velit omnis unde porro doloribus consectetur rem.
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...