jscpm
Titanium
- Joined
- May 4, 2010
- Location
- Cambridge, MA
If I am forming a company with other people and use custom-built machines as part of my equity contribution, how are those machines valued? Can we just assign whatever value we want? This has implications for taxes.
For example, let's say I contribute a bunch of machines and software that I built and we value the machines at $1 million. If I later sell my shares in the company for $2 million, then my basis I assume is $1 million so my capital gain is $1 million, but if we value the machines initially at $1.5 million, then my capital gain is only $500,000.
Does anybody know what the rules are for this?
For example, let's say I contribute a bunch of machines and software that I built and we value the machines at $1 million. If I later sell my shares in the company for $2 million, then my basis I assume is $1 million so my capital gain is $1 million, but if we value the machines initially at $1.5 million, then my capital gain is only $500,000.
Does anybody know what the rules are for this?