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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4092
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have 2 questions, #1 I have a question, if you have the

Customer Question

Hello,
I have 2 questions,
#1 Hello,
I have a question, if you have the answer and solution to my question then I would be glad to py for the service.
I have a startup corporation; I have cash in the back of my own personal. the corporation is a c corporation in Illinois, and I. I will be investing the cash into some real estate transactions, but want to do it in the name of the corporation. What I thought about doing is signing a contract as an investor with the corporation, it will then, take my cash and invest it in the real estate transaction. My corporation buys and homes, fixes them and re -sell. what would be the best or recommended course of action for when it comes to tax time as to how I would claim this as an individual and as a corporation. I want to make sure I structure it correctly?
#2 I have no par value stock and and want to increase number of shares for the coroporation , currently have about 5,000 and and want to increase to 10,000,000 at the lowest value which comes out toabout 0.0001 or somthing like that . Then the goal is to trade my cash for stock in the corporation and use the funds to invest. How would this work during tax time for individual and the corporation?
Submitted: 9 months ago.
Category: Tax
Expert:  PDtax replied 9 months ago.

Hi from just answer. I'm PDtax. I'll assist.

The first, real estate rehab, is best owned and financed by you personally. Use the corp to run the rehab and pay your contractors. Use insurance to cover your personal risk of injury at the site. Let the corp borrow money from you to pay out, then repay you at closing.

Expert:  PDtax replied 9 months ago.

The second dues not require a substantial number of new shares for you to invest additional funds. A loan or just a capital contribution might meet your needs.

I want to check on the state tax on capital, just to see if a tax must be added to the cost of a stock recapitalization like you are considering. Right back...

Expert:  PDtax replied 9 months ago.

Illinois has a tax on paid in capital, but it is relatively small, not based on the number of shares but instead the total paid in capital. You can expand the number of shares as you like without sizable tax cost, and the legal cost might not be too bad either. I don't think it is necessary to expand the number of shares you own 100% of, but you likely have your reasons.

Thanks for asking at just answer. Positive feedback is appreciated, using the rating scale below. I'm PDtax.

Customer: replied 9 months ago.
From a tax perspective regarding the real estae, when the corp borrows from me and they pay back at closing will this look like a profit and loss situation. So if the corp borrows 8 thousand and then pays back 8 thousand then that is a gain and loss and I would not owe tax on 8 thousand?
Expert:  PDtax replied 9 months ago.

The repayment of a loan is not a profit or loss transaction, nor does it look like one. No tax would be due by you.

PDtax

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