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In this episode, I discuss the potential tax consequences of not involving a tax professional when converting a receivable into additional equity or capital ownership, restructuring a company, etc.

This can be true if the deal is done closer to year-end when there isn’t much time to make changes to the conversion or restructuring.

What might have been a loss for the book financial could be income for tax. The same is true in the reverse. There could be a taxable loss and income for book purposes. This is because of the book-tax differences (M-1).

It’s important to involve a tax professional to help you study the tax consequences of any equity conversions, spin-offs, mergers, etc before the deal is finalize and the year-end rolls over to a new tax year.