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I can help you with your balance sheet question. I have attached my workings of the balance sheet given your facts provided.
Please have a look over and let me know if you have any questions. There should be no opening balance equity unless the Holdco is being merged into the NewCo.
My apologies, I read that the notes were assets of HoldCo and were being contributed to NewCo in exchange for an interest in NewCo. Since HoldCo is contributing liabilities it would have a deficit in it's capital.
How does the original investor contribute $3M?
Please confirm the facts for me:
1. NewCo is formed by "New Investor" contributing cash of $1M and Holdco Contributing assets of 14K and liabilities of 480K.
2. NewCo uses 500K of "New Investor" cash to purchase an interest in Holdco for 500K.
3. 500K in cash will remain in NewCo.
If you can confirm this for me as well as clarify how the Original Investor has a $3M interest in NewCo I can update the balance sheet.
I have updated the balance sheet workings given the facts above. The 75/25 ratio is maintained. Note that the new investor must have equity to start of at least 1M as he contributed 1M to start the newco.
Let me know if something is still not quite correct as you see it. \