Good Morning Fellas, I have a question about profits and taxes. Last January I invested money with my sister and her husband's home building company. I took a loan out of my 401K which is contributed by after tax money. Fast forward to now and I've tripled my investment. The market has been very kind to me. My intent was to use this money to pay off debt. My 401K loan, RV, boat. I've honestly never been in this situation and am not sure how to keep the IRS from raping me. I understand I will be taxed on this profit, but is there someway to shield myself from a straight 30%+ tax next year when filing my taxes? Does the fact that the original investment was all after tax money even matter in this equation? Like I said my intent is to pay off debt. I'd love to invest in land, but I'm not ready for that right now. Thanks in advance for any guidance.
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Originally posted by Danno View PostGood Morning Fellas, I have a question about profits and taxes. Last January I invested money with my sister and her husband's home building company. I took a loan out of my 401K which is contributed by after tax money. Fast forward to now and I've tripled my investment. The market has been very kind to me. My intent was to use this money to pay off debt. My 401K loan, RV, boat. I've honestly never been in this situation and am not sure how to keep the IRS from raping me. I understand I will be taxed on this profit, but is there someway to shield myself from a straight 30%+ tax next year when filing my taxes? Does the fact that the original investment was all after tax money even matter in this equation? Like I said my intent is to pay off debt. I'd love to invest in land, but I'm not ready for that right now. Thanks in advance for any guidance.
In what form did you make your investment? Did you invest in their company through a purchase of equity ownership? Or did you invest in a single project and upon the sale the profits were distributed to you?
In other words, is your money still invested with them or was it distributed?
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Getting the money through a loan on pay your 401K does not impact your taxes as long as you pay back the loan before you leave your job.
A lot more information is needed to get the tax advice you're looking for. Like asked above, what did you get for your investment (equity/loan)? How is the company set up (S vs. C Corp).
Well worth your time and money to sit with a CPA to get it straightened out.
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Originally posted by Danno View PostThank you gents, I'm hoping to continue with this as long as they let me. It's a small Custom Home Business/LLC. I'll go ahead and seek out a professional to get it done right.
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Originally posted by Danno View PostThank you gents, I'm hoping to continue with this as long as they let me. It's a small Custom Home Business/LLC. I'll go ahead and seek out a professional to get it done right.
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