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if a self employed individual, sole propiator , is not incorporated and doesn't issue W2s to himself,
canb he still establis ha 401 solo?

2) a consuttant helps a start up comonay and vs cash cempensation he recieves anm equity interest.

5 yrs later he sells, is it cap gaon?

was it a taxable event originally at the time of reciept?

TIA susan
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if a self employed individual, sole propiator , is not incorporated and doesn't issue W2s to himself,
canb he still establis ha 401 solo?


Yes, but if you're thinking of doing this for 2010, it's too late. The plan had to be established by 12/31/10 even though funding could be deferred until the filing of the 2010 tax return.

2) a consuttant helps a start up comonay and vs cash cempensation he recieves anm equity interest.

5 yrs later he sells, is it cap gaon?

was it a taxable event originally at the time of reciept?


Yes and yes.

Ira
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Ira- thanks for your reply. Ths will be for 2011 so it needs to be established by yr end 2011.

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?

TIA
susan
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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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