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If I start a private corporation and it gets a large equity injection from an outside investor, is this taxable in any way, or is it not until I get paid a salary or get a disbursement from the corporation that it becomes taxable?

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This stock is the same as any other, but you need to keep clear in your head that you and your company are now different entities. You (the person) will pay tax on capital gains and losses when you sell any stock that you hold in your own name. You'll also owe "regular" tax if you draw a salary, etc. The fact that it may be "your" company does not change these things.

The company will not recognize a gain by selling stock to raise capital since it's nominally exchanging things of equal value, say $100 in cash for $100 in stock. In order to sell stock, however, you MIGHT need to register with the SEC depending on how you're going about finding your investors, so keep that in mind.

  • If it's privately held by one person who owns 100% of the stock, wouldn't even the initial sale to raise capital be considered a capital gain since the owner is effectively selling some of their own shares? Or, can the corporation create additional stock out of thin air and sell that, diluting the original owners percentage, but without capital gains? (Maybe it depends on the corp type?) – TTT May 31 '16 at 21:56
  • @TTT additional stock. founders get diluted – CQM May 31 '16 at 22:03

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