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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1650
Experience:  Certified Public Accountant
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04 November 2016 05:39 This is a tech startup incorporated

Customer Question

04 November 2016 05:39
This is a tech startup incorporated in the last two weeks. An incubator offered us $25000 for 6 percent of our stock. We incorporated at .0001 per share and the incubators investment bring it to .0595 per share. Is the difference taxable now or only if I sell it?
Submitted: 6 months ago.
Category: Tax
Expert:  Mark Taylor replied 6 months ago.

Sorry I needed to step away from the computer. When the stock is sold the difference between the price and the original per share value is recorded as additional paid in capital. There would be no tax impact to the corporation. When I responded before I thought that you were buying the stock individually. Individually there are special rules regarding for gains and losses of qualified small business stock.

Customer: replied 6 months ago.
Would there be a taxable event for the shareholders?
Expert:  Mark Taylor replied 6 months ago.

The only time there would be a taxable event is if the shareholder dispose of their stock. The shareholders are separate from the corporation.

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