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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10432
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Question for any accountant or financial guru in here: Less

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Question for any accountant or financial guru in here: Less said I have $250,000 cash under my mattress. Money that I had paid already income taxes; I take the money out of my mattress and I use the money as star-up money for a new LLC business (single member):
1. Can I declare the money as “Star-up Cash Flow”? Do I have to paid taxes again on the start-up money?
2. Or this money would be seen as owner equity in the business?
3. Do I have to explain the IRS why I keep that much cash money under my mattress?
Clarification: I am not laundering money. The money source is legit. I don’t have this type of mattress or access to it anyway. This is just answers I need for a business plan I am writing.
Thank you for your help.

1. Can I declare the money as “Star-up Cash Flow”? Do I have to paid taxes again on the start-up money?

You don't pay taxes on the investment of capital, you will only pay taxes on any profits made by the business, interest, dividends or capital gains. As you said, since the principal has already been taxed, it would only be increased wealth from it's investment that would create another taxable event.

2. Or this money would be seen as owner equity in the business?

That's right it's owners equity and would coincide with any assets that it's used for on the other side of the balance sheet (Assets = O.E. + liabilities)

3. Do I have to explain the IRS why I keep that much cash money under my mattress?

No, the IRS is only interested in INCREASED wealth, like gains from it, interest on it, dividends generated by it. ... If it's in your mattress, then there's been no increased wealth from it.


...hope this helps! and good luck on your venture.

Lane

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Customer: replied 4 years ago.

Thank you Lane. This help alot.


You are very welcome.

Again good luck!

and thanks for the feedback.



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