What is the name of your state (only U.S. law)? CA
My partner and I founded a new web service LLC mid-year. Neither of us put capital into the business. We did subsequently obtain loans in both our names and the LLC for $40,000 to start the business. We each have 50% interest and originally $0 basis.
I have been doing nearly all the work developing the business and software. We have agreed I should receive $$ for the work I have been doing. We currently have no profits as we haven't released the service yet.
So the questions are:
1) Is our basis still zero or does the loan become our cash basis and we each have a basis of $20,0000?
2) How do I receive the cash payment? I am unclear if it is a "guaranteed" payment, distribution, or just a payment for services (listed as an expense) and my basis is irrelevant.
Thanks!
Jason
My partner and I founded a new web service LLC mid-year. Neither of us put capital into the business. We did subsequently obtain loans in both our names and the LLC for $40,000 to start the business. We each have 50% interest and originally $0 basis.
I have been doing nearly all the work developing the business and software. We have agreed I should receive $$ for the work I have been doing. We currently have no profits as we haven't released the service yet.
So the questions are:
1) Is our basis still zero or does the loan become our cash basis and we each have a basis of $20,0000?
2) How do I receive the cash payment? I am unclear if it is a "guaranteed" payment, distribution, or just a payment for services (listed as an expense) and my basis is irrelevant.
Thanks!
Jason