My own corporation's stock

Don Quixote de la Mancha quixote at dulcineatech.com
Tue Oct 27 11:46:05 EDT 2009


On Wed, Oct 21, 2009 at 7:42 PM, Anthony <gnucash at inbox.org> wrote:
> Stop right now and go talk to a tax professional.  You are creating a
> huge mess and significant tax liabilities (for your corporation, for
> yourself, for your fellow board members, and for your employee).

I fully intend to get professional advice, but I'd be grateful if you
could give me at least a clue as to why it would be a problem for all
of us to be paid with stock.

I do expect that tax would be due for salary paid in the form of
stock, but I don't see how that would be any kind of problem - I would
calculate the withholding just like I would for salary paid in cash,
and pay it down at my bank with a Federal Tax Deposit Coupon.

I wouldn't expect to owe any tax for stock granted to me in return for
spending my own money, until some time in the future when I sell my
stock, at which point I may owe Capital Gains tax.

I incorporated my company by following the advice in Anthony Mancuso's
How to Form Your Own California Corporation, published by Nolo Press,
a highly regarded self-help legal publisher.  Mancuso is an attorney
himself.  There are several places in the book where he specifically
says that it's completely appropriate for one to be paid with stock,
provided that this stock is compensation for work that has actually
been done.

The only possible problem he mentions is that one cannot receive stock
in return for work that is to be performed in the future - stock can
only be granted for work that has already been done.  Mancuso is quite
emphatic about that point.

I will promise you that my company won't actually issue any stock
until I have spoken to a professional.  My concern was really how to
record it all in GnuCash until I was able to pay for an accountant -
money is quite tight for me these days, but it won't always be.

For now I'll be OK to follow Timothy Wight's advice about recording
the use of my personal funds and my directors' fees as liabilities
until I do come up with some way to handle actually compensating all
of us.

Regards,

Mike
-- 
Don Quixote de la Mancha
quixote at dulcineatech.com
http://www.dulcineatech.com

   Dulcinea Technologies Corporation: Software of Elegance and Beauty.


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