Hello, I'm trying to think about structuring a transaction for a second business venture. I want to pull funds or loan funds from a first business and transfer it over to a second business. Can this be achieved without paying taxes on the funds transferred to the newly formed second business?
Is it possible to transfer or loan money from your first business to a second business and not pay tax on the transaction?
Answers
You should speak with your
Otherwise you can invest in the other company, where company one would have an equity position.
Yes, you can borrow funds from Co. A and use those funds to make an equity investment in Co. B. There is no tax on initial transaction, however, need to make sure you have a promissory note and loan agreement with Co. A and a Corp, LLC or LP agreement for the equity investment in Co. B.
Can you make a transfer without loaning the funds?
If you prepare one tax return that covers both entities, transferring cash may be an option, but consult with your tax advisor.
Thank you. I have what I need. They will be two separate entities. We wanted to make sure we had some research before taking to our tax adviser. We are leaning towards the loan option.
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