How to Convert a C++ Structure into C# Structure?

Is there any way to structure a convertible note so that investors don't get interest income (1099-INT) when the note converts to Series A preferred?  (Convertible notes convert principal and accrued interest to the next "qualified equity financing.")

  • Assume investor invests $50,000 in Convertible Note at 5% interest, which converts to Series A in a year.  He is issued $52,500 worth of Series A.  Can this transaction be characterized so he holds those shares with a $50k basis and doesn't recognize the $2500 as interest income for tax purposes?  Yes, in that case the basis would be $52,500, but the investor would rather not pay tax on something that did not generate cash and which may fail.

  • Answer:

    Yes there are ways to do this, but you are getting into a highly unique structure that goes way beyond what could be explained in a Quora post.  You should also know that the methodology is not always that popular because it also prohibits the company that issues the bonds from taking a tax deduction for any accrued interest on the bonds. If you really want to know more start by researching Bethlehem Steel vs United States, Columbia Gas vs United States, revenue ruling 68-170 and Treasury Reg 45.  (that last one is a good one as it is from 1920)

Wray Rives at Quora Visit the source

Was this solution helpful to you?

Just Added Q & A:

Find solution

For every problem there is a solution! Proved by Solucija.

  • Got an issue and looking for advice?

  • Ask Solucija to search every corner of the Web for help.

  • Get workable solutions and helpful tips in a moment.

Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.