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    1 Reply Latest reply on Jan 26, 2008 8:18 AM by LUCKIEST

    International Invest. question with some Tax implications

    Crystal Newbie

      I have a question!

      I run a small export company. We are going to INVEST in a company in one of our international locations. That indipendent location handles our sales.

      The investment is in the form of around 7000 USD in Computers. I am also the "corporate coach" for the international location.

      Our relationship as of now is 2 seperate entities.

      The agreement we are going into right now is that if i invest the 7000 in IT hardware, ill get 50% shares.

      Now. Here is my question. I can position this in 2 ways.

      1 - A Loan

      2 - A Capital Investment

      IF i invest as a loan to the company there, is it fair to ask for 50% shares resulting in an ROI for me of around 2000% by year end of the second year? If the company there is also taking a loan for the other 50% start up costs, is it fair? Especially when I am here and not directly HANDS ON on the operations. Also, what do you think if i make sure the partner over there is getting paid? Does that aleviate any of the flak i may see in the future as an 'unfair inverstor?' I am really trying to avoid any sourness in the future.

      3 - In addition to this, my question is what if i just make it a capital investment of cash (computers), and then just cash in on the dividends/year end capital returns? If this more fair? The down side i see here is that my returns will be after government tax in that country, and then again taxed on my income. I may be able to get docs to show that and avoid double tax here, but there may be an easier way.

      I dont know the internatioanl tax implications yet, i would have to talk to their embassy. But should it be like the US, would it make sence if the company over there was an S corp or LLC? Then would i dodge that first taxation?

      Any tips would be great! Sorry for the exteended question. I hope its clear
        • Re: International Invest. question with some Tax implications
          LUCKIEST Guide
          Crystal, Welcome to this website. I just answered your second question first.
          Suggestion. As you know I am a SCORE Counselor SCORE is FREE. As you will find out, this site loves
          the word FREE. SCORE is a partner to Bank of America and provides FREE business Assistance.
          You can visit SCORE online and find SCORE counselors (more than one) with the background
          you are looking for. You can ask them questions (like you just asked) and they will answer you within
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          Again Good luck, LUCKIEST
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