If the reciept of the equity interest was taxable upon receipt,how would one value that? It is worth 0 or something some day, so place a speculative value on it?You get a professional valuation of the business as of the date of the equity transfer and the value you receive (% of equity) is the taxable amount. This becomes your cost basis in the business for use in calculating any future capital gain or loss. (The preceding is an oversimplification. If you are going down this route, it is essential that you get competent professional legal and accounting assistance before any transaction occurs.)Ira
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