Is start-up funding taxable.

"whimsica" wrote

It's either a loan or capital. The documents that you will sign will tell you what type of investment this is (debt or equity). It clearly isn't for products or services and shouldn't be considered sales or revenues. There's a scary implication here that you don't know what's going on, and quite frankly no one is going to hand over $7 million if you don't know how to handle it. So do yourself a favor and find a local CPA to guide your accounting controls and reporting from the start.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Seven million eh? How did you get ahold of all this free money? It IS free isn't it? I mean, you don't have to pay it back? Usually "venture capital" from one of those type companies means that they invest in the company, either by buying stock in it, and/or lending the money which has to be paid back. Perhaps you need to sit down with competent local accounting help, either a CPA or an EA in your area who can explain the ins and outs better than we can here electronically. ChEAr$, Harlan Lunsford, EA n LA

Capital funding is not income, so there is no income tax on it. It's just that simple. Now if some of this capital was in a form of in kind property the investor may have an income tax problem. But not the company - at least not until whatever it is has been sold. Stu