August 5, 2020 by investor
Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
In raising funds from family and friends, you could take it in the form of a gift.
Most family and friends want to help you out rather than make a return.
A gift is an ideal way of taking the funds without going through valuations, loans, and other funding mechanics.
The tax laws allow anyone to gift up to $15,000 per year, without triggering the gift tax which can be as much as 40%.
While the IRS has established the $15,000 basic limit per person, wealthy gift givers can choose to exceed the annual limits and gift even more money to anyone up to a total of $5.3 million.
It’s not a good idea to gift the funds directly to the startup. The IRS expects that in exchange for the money, the gift donor would normally receive stock in the corporation.
You may want to return the favor someday to those who provide the funds as a gift.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.
