Author Topic: Gifting Question  (Read 1519 times)


  • 5 O'Clock Shadow
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  • Posts: 19
Gifting Question
« on: April 11, 2017, 07:29:41 AM »
So I invested in a startup company. You needed to have a million dollar net worth to invest. Since my children couldn't legally invest because of their net worth, they decided to give some money to me to invest for it possible to then gift them the equity of the company proportionate to the money they invested? Just to get it out of my name for tax reasons when the day comes the company starts paying out...any advice is greatly appreciated.


  • 5 O'Clock Shadow
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  • Posts: 18
  • Location: USA
Re: Gifting Question
« Reply #1 on: April 11, 2017, 08:45:00 AM »
In my limited knowledge for the US, this involves Regulation D. Rules 506 or 504 would have allowed them to invest themselves if the proper steps were taken. As an after the fact situation, I am not sure what applies.

If this is in Canada, keep in mind that unrealized gains need to be claimed on taxes when gifting securities.


  • Handlebar Stache
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  • Posts: 1079
Re: Gifting Question
« Reply #2 on: April 11, 2017, 12:35:58 PM »
You need to carefully read your shareholders agreement.

1. If you had to be an accredited investor to invest, you could be making problems for yourself and the company if you successfully transfer shares to not properly accredited investors. The start up may now be in violation of securities law, which lowers the value of your investment. This of course has the benefit of eliminating any future tax problems!

2. Its very common for start ups with good legal representation to place severe limits on your ability to sell/transfer your shares.  You may only be allowed to during funding rounds or other specific events. Your ability to sell during those events may also be limited by your position in line. (series A investors before series B)

3. you probably need to stop making investments like this until you know what you are doing.  Or you need better advisors. Investments that require you to be accredited are not necessarily better, they in fact can be much more risky because the regulations protecting you are your wit and your securities lawyers.


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