Sunday, March 28, 2021

Small business startup cost injected in Bitcoin

Hello

I’m starting a business and planning to cover the bootstrap cost with my Bitcoin - would appreciate a quick sanity check:

  1. Open a sole proprietor LLC - not a taxable event

  2. I am lending Bitcoin to the newly founded business. Loan terms are based on similar services (like 4.5% apy for 10 years) - not a taxable event

  3. Business sells borrowed Bitcoin to cover setup costs - Taxable event, cost basis is the rate at the time of the loan, not the rate I acquired Bitcoin in the past. For example: if business sells Bitcoin instantly after getting the loan, profit/loss is zero

  4. Business starts paying back the loan. Taxable event, interest profit on my side personally

Step 3 is the one I’m concerned about

Thank you so much


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