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I own 4 percent of a private company, if that company is…

Customer Question
I own 4 percent...

I own 4 percent of a private company, if that company is used to buy another company do I 4 percent of the new company?

Accountant's Assistant: What state are you in? It matters because laws vary by location.

The state the company is in is Virginia.

Accountant's Assistant: Has anything been filed or reported?

I am not sure I have not see any thing on my taxes last year.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

No i think that is all for now

Submitted: 4 months ago.Category: Tax
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Answered in 9 minutes by:
1/1/2018
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,135
Experience: Adjunct Professor
Verified

Hey! I'm Carter, I'm a CPA and can help you out with this.

It will depend on how the transaction is done. The two most common ways is to create a parent-subsidiary relationship. Another common way is a merger.

Generally, you do not directly own 4% of the company that was purchased. You indirectly do own 4% of the company. The company will generally be a subsidiary then.

If the purchase of the company leads to both companies no longer existing and a new company being formed, your ownership percentage will vary based on the merger agreement. If you do lose equity in the company as a result of a merger, then you are typically provided some compensation to make up for it.

Hope that helps. If you need anything else just let me know. If not, please leave a rating. Thanks!

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Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago

Hey! Just wanted to follow up and see if you need anything else. If not, please leave a rating. Thanks!

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