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Showing posts from August, 2018

Maximizing Qualified Small Business Stock Benefits

Disclaimer 

OK, so this isn't strictly about crypto, but I discovered something about QSBS benefits today that interested me.  The point is that it may be hugely beneficial to sell your low basis stock in year 1 and delay selling your high basis stock until a later year.

Generally, IRC Section 1202 says that if you hold QSBS for 5 years and then sell it, you are entitled to exclude the greater of $10 mm of gain or 10x your cost -- or at least that's how most people think about it. 

However, IRC Section 1202(b)(1) provides something a little different:
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In general: If the taxpayer has eligible gain for the taxable year from 1 or more dispositions of stock issued by any corporation, the aggregate amount of such gain from dispositions of stock issued by such corporation which may be taken into account under subsection (a) for the taxable year shall not exceed the greater of—

     (A)     $10,000,000 reduced by the aggregate amount o…

Optimizing your structure further

Disclaimer 

I had a new thought the other day about setting up vehicles for promoters of new token networks.

As a starting place, assume there are 3 places that Tokens in your network can go:
You can give them back to your founders / early investors;You can sell them through SAFTs or Token sales for fiat or other crypto currencies that you then use to fund operations and possibly distributions to your shareholders; andYou can give them away either in an airdrop, to miners, to some kind of non-profit or simply to early adopters. I have been focused on maximizing the value to the founders and early investors -- which is why I've generally proposed that you set up an LLC HoldCo and deposit with it ~30% of the tokens (see http://cryptoblog.duncanpc.com/2017/09/2c-llc-holding-company-structure.html).

However, I have realized that there is an opportunity to increase that value further.

First (and simplest), you could retain a larger percentage of the network tokens in the LLC HoldCo.  Th…