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Updated over 4 years ago on .
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Moving capital/profit from private Investor to LLC
How is capital/profit moved to and from an investor to a business? Person X wants to invest in Flipping LLC. Can they simply wire 100k to the business account?
Can the business account wire 110k to person X when the project is over? Does person X need a legal structure? Are there tax or reporting issues with transferring large sums of money between an investor and a business?
Thank you!
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#5 Tax, SDIRAs & Cost Segregation Contributor
- Accountant
- Atlanta, GA
Person X wants to invest in Flipping LLC. Can they simply wire 100k to the business account?
Generally yes.
Can the business account wire 110k to person X when the project is over?
Generally yes.
Does person X need a legal structure?
There are both legal and tax facets here. Person X should consult their own, independent advisors. You as GP/managing member should not be advising on this matter.
Are there tax or reporting issues with transferring large sums of money between an investor and a business?
Maybe. Distribution in excess of basis, debt financed distribution, repayment of reduced debt basis (if S Corp) are some possibilities that come to mind.
This isn't something that you can or should DIY. Kind of like open heart surgery. It's advisable to retain a professional.