Hi everyone. Client has been running a sole proprietorship for seven years and has built a business that now may get some funding. He's run up $500K in expenses during that time, most of which has been written off on his individual returns. He wants to recoup this loss.
I told him he could argue that the intellectual property and patents could be his contribution to the Corp, valued at $500K, and exchanged for stock, a potentially non-taxable exchange under Sec 351.
If he's already written off the losses on his individual return, though, does the stock need to be claimed as income? Or does it depend on whether the stock is vested?
Are there other ways to do this? He said a CPA told him he could call it an expense reimbursement, but this doesn't seem possible for something that stretches so far back from the inception of the enitity.
Thanks in advance.
I told him he could argue that the intellectual property and patents could be his contribution to the Corp, valued at $500K, and exchanged for stock, a potentially non-taxable exchange under Sec 351.
If he's already written off the losses on his individual return, though, does the stock need to be claimed as income? Or does it depend on whether the stock is vested?
Are there other ways to do this? He said a CPA told him he could call it an expense reimbursement, but this doesn't seem possible for something that stretches so far back from the inception of the enitity.
Thanks in advance.
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