Gifting Equity in a Business

This is a discussion on Gifting Equity in a Business within the Business and Financial Law Questions forums, part of the Legal Questions & Answers Forum category; I own a small business. My grandma invested and purchased 1%. The value of the business hasn't appreciated. She would like to gift it back to me to simplify her ...

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  1. #1
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    Gifting Equity in a Business

    I own a small business. My grandma invested and purchased 1%. The value of the business hasn't appreciated. She would like to gift it back to me to simplify her life and taxes. What are the tax implications if she gifts it to me or if I buy it for a $1


  2. #2
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    What is the value of the 1%?

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    This is just a great investment by the old lady,

  4. #4
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    Arrow Solve your psychological issues and choose wisely

    You can get an annulment rather than having a divorce only in certain conditions, either one of the couple should be mentally unstable, should be uni sexual, or addicted to drugs.So choose wisely what you have to do. Make up your mind and get some psychological help from the best Edmonton divorce lawyers. They will definitely help you out.

  5. #5
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    If she gifts it to you and it was over a certain dollar amount, then you're talking about having some tax implications, because once the dollar amount reaches a certain threshold, your grandmas is required to report it and you are required to claim it.

    On the other hand, there are also other options such as you purchasing her equity interest in the business as well. The one thing to note about this is that if she invested $20,000 for 1% and then you buy it back for $1, then this could raise red flags (although it could be legitimate because oftentimes a business costs a lot to get off the ground and doesn't really grow in value at first or may never grow in value since most small businesses fail...) but anyway as long as the amount you're purchasing the equity back for is a reasonable amount considering the current status of the business, then it won't be a problem as long as it is documented. And one more note, when I say most small businesses fail, I don't mean to be discouraging. I certainly want yours to succeed! And I am sure you have what it takes, just make sure that you handle your legal tax issues and your business legal issues properly so that you don't end up with the IRS on your case.

    The IRS is quite possibly the worst group to have on your case, it's serious business, so don't ignore a letter from them if you get one. Treat them carefully. You don't need to pay any more taxes than legally and lawfully required...there is no moral or legal obligation to pay any more than what is specifically required by law, but if you simply don't pay or simply ignore the law, then you will run afoul of the IRS which is something that you do not want to do.

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    Very interesting post. I think it is useful for many clients. Thank you for this information.

    Utah Short Sale Agent

  7. #7
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    There will be the tax on gifted property after its tax able time duration ....


 

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