Re:Why your startup should be a Delaware C-Corp, not an LLC
by nthj on Wednesday March 15, 2017 @06:29PM
(#13880482)
I'm asking out of curiosity (e.g. I have no need to pay a lawyer or CPA to answer this): Would the founders have to potentially, or always, pay taxes on the conversion? Seems like the sale of the LLC or the assets could be recognizable gain.
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Re:Why your startup should be a Delaware C-Corp, not an LLC
by uiri on Wednesday March 15, 2017 @10:18PM
(#13881847)
It seems like it would qualify under the rules of an Other Nontaxable Exchange - Property Exchanged for Stock.[0] I think there are enough cases like this and the IRS rules are sufficiently clear that it will be possible to structure the VC investment in a way that eliminates any tax liability on the conversion.
[0] https://www.irs.gov/publications/p544/ch01.html#en_US_2016_p...