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  • Tax Incentives for Startups and Investors

    As the leader of Upstart: Business and Management for 20-40 Year Old Professionals, I am very interested in this, as I look for financing to growth the Upstart portfolio.

    Now you can sweeten the pot for your potential investors. This a limited opportunity that might be a one-time event.

    Today’s Wall Street Journal illustrates the way investors might be able to get a bigger bang for their buck, by not paying for profits on a startup they have stock in. Barbara Weltman explains in Why Now is the Time to Seek Investors, yet there are conditions to the seemingly one-time deal.

    In Why Now is the Time to Seek Investors, Weltman states, “An individual—an investor, a current owner, an employee—who acquires qualified small business stock and holds it for more than five years pays no tax on gain. Say you are starting a technology business now and find an angel investor. As long as you close the deal before the end of the year and the investor hangs on until 2016 (after holding the stock for more than five years), the investor can sell and pay zero tax on his or her profits…From an entrepreneur’s perspective, this tax break is a great incentive to tout when seeking equity financing, whether it’s for starting a business or expanding one. From an investor’s perspective, what could be better than no tax on profits? Since the break applies only to stock, investors in limited liability companies and other unincorporated businesses cannot enjoy zero tax on their profits. But not every corporation entitles stockholders to the 100% exclusion on gain. The stock must be “qualified.”

    As the leader of Upstart: Business and Management for 20-40 Year Old Professionals, I am very interested in this opportunity, as I look for financing to grow the Upstart portfolio. It definitely should be attractive to potential funders: hope it helps our specific cause.

    Good Luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals
    calvin.wilson1@verizon.net
    http://twitter.com/Upstart__Nation

    Filed Under: Startup/Entrepreneur

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