All in Venture Cannabis News

HOLD ON THERE! DON’T FORGET THE HIDDEN HOLDING REQUIREMENT

A 1031 exchange affords taxpayers a significant benefit by deferring the payment of taxes normally payable upon the sale of property when that property is effectively exchanged for property of the same kind that is held for productive use in a trade or business or for investment.  Section 1031 of the Internal Revenue Code, whichprovides for the exchange, afford taxpayers considerable latitude by not defining the term “property” and by using it rather expansively.  . Although real estate is frequently the property exchanged in 1031 exchanges, no such limitation is found in the statute and there is no reason to limit the use of 1031 exchanges to transactions involving real estate.    In fact, a wide variety of types of property can be exchanged, from real property to computers, automobiles, airplanes, licenses and copyrights.  .

THE IRS IS HANDING OUT INTEREST-FREE LOANS TO SAVVY INVESTORS

Whether it’s called barter, trade, or swap, the 1031 exchange is one of history’s oldest types of economic transactions. Where each side receives equal value for what it relinquishes the exchange is a model of economic efficiency. The Internal Revenue Code recognizes this efficiency by allowing a taxpayer to defer the payment of taxes normally payable upon the sale of property when that property is effectively exchanged for property of the same kind that is held for productive use in a trade or business or for investment. The gain is viewed as not having yet been realized, because the exchanging taxpayer has not been paid for the relinquished property.

THE INFINITE POWER OF TRUSTS AND THE RISE OF THE ANTITRUST

The introduction of trusts may arguably be the most innovative development in common law.  A trust is a relationship by which property is held by one party for the benefit of another.  This simple division between control and benefits creates an infinite world of possibilities to the creator in managing his or her assets.  The great American industrialist and philanthropist John D. Rockefeller seized on this innovation to grow Standard Oil into the greatest monopoly Wall Street had ever seen.  In only two decades, Rockefeller shocked the very foundations of the American economy and forced the hands of authorities to introduce antitrust laws to level the playing field.           

CHOICE-OF-ENTITY FOR FUNDING

Your average start-up guru, entrepreneur blogger, and business lawyer will recommend forming Delaware C-Corporations when seeking to attract VC funding. The theory is VCs refuse to invest in LLCs because operating agreements are often nebulous and legal precedent too uncertain. This “accepted” logic is so circularly cited that it seems impervious to exception.  It’s not.  There is still a choice of entity.