I was fortunate enough to be able to participate in a pre-IPO stock purchase program. The only restriction was that all the stock had to be put in my name. I put together a group of family and friends, and with our combined funds, purchased the stock. I sold some of the stock right away, for a good profit-if one ignores the taxes! foolish, foolish, foolish, but I didn't know about long term capital gains and MF then, I'm learning, I'm learning. The group is going to hold the remainder of the stocks long term, to that end I have asked my broker to issue each participant their remaining stock in certificates. Now, I'm left with how do I account for this tax wise. My questions are; Sale of Stock1) I withheld the estimated taxes & fees from the sale, prior to dispersing peoples money. I had planned to claim the profit and pay all the taxes on the stock, which was sold, but I am in a higher tax bracket than most of the people in the group. Is there any way for each participant to claim their profits & pay their tax?2) If I claim the profit & pay the tax, does each participant need to account for the post-tax profits from the sale that I dispersed to them?Issuance of Stock Certificates1) When the certificates were issued their value was above the purchase price. How do I document the "transfer" the ownership w/o incurring a gain? Each person paid into my brokerage fund the exact purchase price for the number of shares they were buying at the time of the IPO. I received no benefit. Unfortunately, only after completing this debacle, did I learn about the ability to purchase stocks as a trust, eliminating all these muddy tax issues.... alas if we could only do things again, better than first time.
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