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Capital Gains vs Income

  • #322077


    Hello all,

    So I have invested in several different investments that are potentially going to produce revenue as early as 2021. However, I don’t know how these different revenue streams would be classified and am hoping for some help.

    1) Digital Brands Group – Listing on public market – I think this one has been covered enough
    2) Furry Fortune/Intellivision – Profit sharing – Is this considered regular income, or capital gains
    3) Illume Nashville/other real estate – rent distribution – income or capital gains
    4) Terracycle – dividends – income or capital gains

    Understanding that to avoid capital gains tax, revenue needs to be reinvested until the 5 year mark, do any gains that are reinvested count against your annual Reg A/Reg CF limits?

    Thank you all,

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  • Author

      • Brad

        I have been reading a lot of articles on this topic, but I do not know if the rules are the same for private and publicly traded investments. Of course the articles don’t specify either, so here it goes:

        1) All income generated from an investment is income. Dividends, rent payments, profit sharing, etc.

        2) It is only capital gains when an investment is sold for more than it was purchased for.

        I’m still hoping somebody with additional experience will weigh in on this, but for now it’s looking like it is regular income unless it is directly related to the sale of shares.

      • Merlynmac

        Great questions! I am uncertain although I have a few assumptions I’d rather someone more certain respond to this one.

        Tagging in so I can see the answers.


        • Brad

          I attended the webinar today and asked these questions. Neil essentially said that any dividends or disbursements should be seen as taxable income. The capital gains doesn’t come in until the sale of shares.

        • Brad

          Thanks! I also have sent an email to Neil and his team directly so if I hear from them I will update.

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