equity, united-states, taxes, funding, investmentMy company is issuing SAFE’s: simple agreement for future equity.
How does an investor treat this for taxes?
Ok did some research on this. The investment itself is not taxable until there is some type of event/sale to realize Gain or loss.
There is no maturity, no interest, so it is not debt. It is similar to a warrant.
When the SAFE converts to equity, there is still no taxable event. But the investor would file an 83(b) to treat the equity as a long term asset and defer taxes to the future upon sale, when gain or loss is realized. The tax basis of the SAFE is the amount of original investment.
All content is licensed under CC BY-SA 3.0.