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Stephen G.
Stephen G., Sr Income Tax Expert
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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In Nevada, are there extra taxes for authorized, but unissued,

Resolved Question:

In Nevada, are there extra taxes for authorized, but unissued, shares of stock? (For ex- 20 million shares are authorized in the art of inc but only 10 million are issues)
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

It isn't the number of authorized shares, it is the value of the authorized shares.

Customer:

Ok- so the par value is 0.001

Customer:

I know in Delaware there is no additional tax on the unissued shares but that information for NV isn't as clear...trying to avoid having to go through the very long tax statutes :)

Stephen G :

It isn't par value, it is fair market value.

Customer:

but there isn't a FMV for a pre-revenue company so how does that work? Is this specific to NV?

Stephen G :

It really doesn't matter as the total value of the company is what determines the value of the stock.

Stephen G :

Why would you need so many shares anyway?

Customer:

right but there hasn't been a value because there isn't any revenue yet- I'm just referring to the stock itself. Would the corporation or the founders/shareholders be hit with any extra taxes?

Customer:

It's pretty standard for start-ups to authorize anywhere from 10-20 million and then issue 10 million (if 20 mil) are issued- in line with what VC's like to see

Stephen G :

Well you are talking about a much bigger operation; let me check on the reference to the fees in Nevada; of course, you realize that it doesn't matter where you are incorporated, what matters is where you conduct business; you could wind up having to file a foreign (to that state - ie Nevada is foreign to the other 49 states) -- state return in the state where you operate.

Customer:

Right- the co is in NV and doing business here (possible also in CA but for now, NV)

Customer:

thank you for checking on that

Stephen G :

Here's a link to the Regulation on the fees............Doesn't look like there's much of a problem as long as you set a low par value. I'm sure your attorney can advise you. If you are talking about raising capital, dealing with venture capitalists etc., I wouldn't attempt to form the corporation yourself; in fact you would need to determine what state they would look on most favorably & that may very well be Delaware.

Stephen G :

http://www.leg.state.nv.us/NRS/NRS-078.html#NRS078Sec795

Customer:

sorry, that doesn't relate to the question about taxes- I'm very familiar with the filing fees my question was really just a tax question about the unauthorized shares but none of the information above is relevant. appreciate the time.

Stephen G :

There are no corporate taxes in Nevada.

Stephen G :

What taxes are you talking about? The only "taxes" based upon stock are fees (which some people consider taxes).

Customer:

Ok- I thought there might be a tax on corporate shares. I know there's no income tax, etc but if there is no tax across the board, even on corporate shares- then my question is answered

Customer:

the fees I understand- and as long as the par value is 0.001 it's a very minimal fee. thank you!

Stephen G :

About Taxes and FAQ'S - the Department of Taxation




tax.state.nv.us/about%20taxes%20and%20faqs.html‎

The State of Nevada does not participate in the administration of Federal Income Tax nor does it levy a State personal, business or corporate income tax.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4037
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you

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