Is income made from purchasing equity in a partnership tax-deductible?
I own a business incorporated as an LLC in the US.
I'm working out a partnership deal in our operating agreement which allows selected individuals to invest into the partnership (become members of the LLC) at a prescribed rate ($R = 0.1% member interest).
How is the money paid by these investors accounted for tax purposes? Is it income to the business (pass-through)?
Any ideas on how to work this out are appreciated.
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If I understand you right, people are giving the LLC money for an ownership share. That is NOT income - it would go under equity on the balance sheet. It is analogous to getting a loan from the bank. It is not income - you get cash (an asset) and have an increase to debt (a liability)
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