How can a pre-revenue startup avoid paying taxes on a development deal whose proceeds will be spent on building product?
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Detail: Our startup is pre-revenue and unprofitable, but we're about to sign a deal that gives a partner company a share of all revenue on a product we're building. That money will be entirely spent on development, but not all in 2010 which is when we're receiving the payment. How can we avoid having to pay taxes on these "profits", since we need the money?
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Answer:
Two choices: 1. add the money to the company as share capital 2. take the money from the partner as a loan
Tim O'Donnell at Quora Visit the source
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