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We are a technology startup with 4 shareholders. Since our

We are a technology startup with 4 shareholders. Since our balance sheet and P&L have become a mess over the years of R&D, as we start monetization, we'd like to start with a clean slate (a new company), so that we become more likely to receive venture investment.We don't just want to create a new company 100% owned by the current one because that will create double taxation in terms of potential capital gains.We can't pull money from current company and create a new one reflecting current shareholder structure either, because it will create complications since some of our shareholders are big and slow to make decision.The OldCo has $70K in the bank and we want to transfer $50K to the new one, keeping the payroll in the OldCo for the next few months.We want to solve this at the board level (two of the shareholders are at the board and we can take decision quickly). Our alternatives are:1) Create a service agreement between the two companies. OldCo pays NewCo a certain amount in regards ***** ***** its current customers. The problem, since NewCo will be cash-flow positive from day one (unlike OldCo) we will have tax liabilities. The question is, how long can we defer those taxable profits.2) OldCo gets a small percentage in the NewCo for its investment, the rest of the company has the same shareholder structure as the current one. The question how small that percentage can be so that the double taxation impact is minimized.3) OldCo gives NewCo a very flexible convertible note (e.g. converts in the next 200 years) The question is, is this feasible.Please advise regarding the three alternatives listed above, or if you have any other alternative approaches you may recommend.

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PDtax

Owner

Master's Degree

 
6,682 satisfied customers
Trying to figure out how shares affect cashflow.. If an

Hello,Trying to figure out how shares affect cashflow..If an owner sells his shares at book value to a new owner for cash, does the total cash flow go up, down, stay the same, or is it hard to tell with only that information?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

 
16,362 satisfied customers
Soon to inherit, and also soon to sell, I'm thinking of

Hello. Soon to inherit, and also soon to sell, I'm thinking of getting into the rental property business. I feel I could start off with three single family homes:1. My father's primary house in Northern Virginia (has $250k remaining on 30yr mortgage)2. My father's second house in Myrtle Beach, SC (no mortgage, all paid off)3. My own house in Northern MD, which I am currently fixing to sell (has $85K remaining on 15yr mortgage)Recent property appraisals, mortgage payment, and average rent are as follows:1. NoVA house (4 bed, 2 full/ 2 half bath, 3000sqft): $360K, $1850, $2000-$24002. SC house (3 bed, 3 full/ 1 half bath, 2000sqft): $200K, 0$, $1000-$12003. My MD house (4 bed, 3 full bath, 2400sqft): $215K, $1150, $1200-$1600My gross income is $95K, I have excellent credit rating, and my spouse and I are comfortable managing people and can do up to "intermediate" level renovation type work/repairs/etc.I would also need to buy another house for my family to live in. Currently looking at needing 85% financing for new primary residence (since I wouldn't be able to use the equity in my current home towards a significant down payment).I was thinking an LLC could be formed to manage these properties, use income to pay off properties, and ensure financial security when I retire 30 years from now.Good idea? How could I pay/ leverage equity/ afford?Thanks!!

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PDtax

Owner

Master's Degree

 
6,682 satisfied customers
My small business has shown a profit years but all the money

my small business has shown a profit for several years but all the money is used to repay loans. However the retained earnings account keep growing. Is there a way to show the use of profits for debt repayment

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Emilee Weaver

Controller

Masters of Professional Accounting

 
28 satisfied customers
We have been experiencing a lot of inventory fluctuation

We have been experiencing a lot of inventory fluctuation with commodity markets going up and down. We have had large losses that did not effect cash flow. wondering if the inventory fluctuatio account in cogs is a cash expense/revenue

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Rakhi Vasavada

Financial / Legal Advisor

Bachelor's Degree

 
3,900 satisfied customers
I have a financial question. I have in total one year left

Hi I have a financial question. I have in total one year left of money for my living expensive in savings I 20,000.00I want to start a business which I already start to with some of my money from my month to month. Basically I need guideness please help me if I'm In a good track also I have started a e commerce of luxury handbags so that's 2 online store one is a GPS and the other a luxury handbag store that will be online both by June July. Please advise. Also I am in debit 50,000.00 in credit and I'm 3000.00 off to paying off my car 2012 car. I don't own a home I do want to. Please advise

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TJ, Esq.

Juris Doctor (JD)

 
10,198 satisfied customers
I would like you to evaluate my retirement and personal

I would like you to evaluate my retirement and personal investments. My wife and I are 74 and only debt is home mortgage ($156K) and vacation cabin ($95K). Our SEP value is $162K and invested in these Equities: Enerplus Corp, Ford Motor Co New, GE Cap Corp, Callable, Ishares Gold Trust, Kinder Morgan, Northwest Pipe Co, and, Tembec Inc New; AND, in this mutual fund: Nuveen Small Cap Select; AND, in these two Taxable Bonds: Goldman Sachs Cap II FLTG, and, Transocean Inc.We are interested in income and income/growth, so that is the reason for the bonds and others that pay dividends/interest.We are too old for growth alone. Our broker is not too hot on investing in long term growth stocks/mutual funds. Not much time at our age to recoup significant losses.Our Personal Savings value is $58K, and, is invested in: Enerplus Corp, Telecom Argentina SA, and, American Cap World Grow and Inc Fd.We have $252K in cash (savings and checking). We have $228K in equity of our home, cabin, cars, and travel trailer.Our estimated net worth is $700K. We get $30K/year from our SEP ($2,500/month) and $36K/year in SS benefits.What are your thoughts of our investments? What changes would you suggest in any area of this information? Good paying interest/dividends on Bonds are very rare now. Our broker keeps an eye open for good paying bonds. We are conservative in our spending and our main checking account grows some each month. Do you think we are pulling out too much from our SEP-IRA?

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PDtax

Owner

Master's Degree

 
6,682 satisfied customers
I have 4 high interest rate credit cards with a total

I have 4 high interest rate credit cards with a total balance of $12,556. I am disabled but have passive income of about 90k but have to prepare for VERY high medical costs coming up. I am thinking about a personal loan to pay off the cards but I have car lease with a year left with a balance of $3500 and I want to know if I should put the lease balance into the 60 month personal loan with a 7.5% interest rate. It will cut my total payments on the cards and car from about 600 to 320 a month but extend the payment on the car...I pay about 331 a month currently on the card minimums..

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PDtax

Owner

Master's Degree

 
6,682 satisfied customers
This is a finance questions. How does a PRIVATE company sets

This is a finance questions. How does a PRIVATE company sets a value for its preferred stock when it wants to sell it to investors so that this type of stock represents an equity in the company and at the same time pays a dividend at a certain rate.

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

 
16,362 satisfied customers
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