| Coming into some money. What now? |
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luv2program
New Member
Cash: $ 0.85
Posts: 4
Joined: 26 Jan 2006
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| Coming into some money. What now? |
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Hello,
I have been offered 500K to license some software that I wrote. The restrictive convenants that the propsective licensee has agreed to makes this an attractive offer for me.
The deal offered was $250K at contract signing and $50K/year for five years @ 8% APR. The company's D&B looks good and we've worked with them for a few years now.
At any rate, like everyone else I'd like to give the IRS as little of it as I can legally get away with. I have an appointment with our tax attorney and a CPA later next week to discuss the strategies. In the meantime, I'd like to get a head start on some of the issues that I will be looking and possible solutions that may be offered. This way, I can have a bit of a foundation when I go in to speak with them.
I make around 90K/year now after business expenses. I have 4 dependants, am homeowner, etc. My business is sole proprietorship now, but paperwork has been sent for incorporation with possible sub chapter S election.
Any advise or links to research would be greatly appreciated.
L
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Thu Jan 26, 2006 5:49 am |
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Andrew
Admin
Cash: $ 467.10
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Joined: 02 Nov 2003
Location: Texas
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From one coder to another... congratulations! 
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Thu Jan 26, 2006 4:06 pm |
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luv2program
New Member
Cash: $ 0.85
Posts: 4
Joined: 26 Jan 2006
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quote:
Originally posted by Andrew
From one coder to another... congratulations!
Thanks, there was a few years there when we were scratching for change under the cushions...
L
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Thu Jan 26, 2006 7:41 pm |
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MattL
Senior Member
Cash: $ 46.85
Posts: 234
Joined: 25 Jun 2005
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Congrats!
It sounds like you have it covered.
I would read up on some similar situations and what happened after 1 year, 2 years, etc. It could shed some light for you on possible outcomes.
Debt Elimination
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Fri Jan 27, 2006 12:38 pm |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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I'll join the others in sending my congrats to you. It's great to hear about successes like this!
The question at hand, that of how to get away with paying the IRS as little as possible depends in part on whether or not you need the funds at this time, or in the foreseeable future. Whatever portion of those funds that are not needed for current cash flow and/or income can be (with restrictions, of course) set aside in retirement plans. You should definitely explore this with your team, and consider adding a CFP to the mix for a broad overview of your overall situation.
Good luck, and again, congratulations!
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Fri Jan 27, 2006 3:16 pm |
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luv2program
New Member
Cash: $ 0.85
Posts: 4
Joined: 26 Jan 2006
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quote:
Originally posted by BlankenshipFP
I'll join the others in sending my congrats to you. It's great to hear about successes like this!
The question at hand, that of how to get away with paying the IRS as little as possible depends in part on whether or not you need the funds at this time, or in the foreseeable future. Whatever portion of those funds that are not needed for current cash flow and/or income can be (with restrictions, of course) set aside in retirement plans. You should definitely explore this with your team, and consider adding a CFP to the mix for a broad overview of your overall situation.
Good luck, and again, congratulations!
Thanks for the congrats, everyone.
The corporation will actually be the "person" selling the source code. So I guess I should be looking at this from a corporate as well as a personal standpoint.
For instance, if it's a question of giving money to the IRS and spending it on legitimate (and much needed) business expenses such as advertising, tradeshows, another tech on the payroll, etc., I'll spend it on the later in a heartbeat.
Aside from that, I'd like to save and invest as much of it as possible.
L
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Sun Jan 29, 2006 2:42 am |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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Well, that's part of what I'm saying. Obviously, if you're going to utilize the funds from the sale of the rights as current cash flow within your corporation, those expenses will be deductible. Beyond that, your corporation can provide you (as the employee, and the sole shareholder) with retirement funds, which can also be deductible. These are options that you need to fully explore with your CPA and attorney, and a CFP as I suggested.
Hope this helps -
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Sun Jan 29, 2006 9:12 pm |
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luv2program
New Member
Cash: $ 0.85
Posts: 4
Joined: 26 Jan 2006
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quote:
Originally posted by BlankenshipFP
Well, that's part of what I'm saying. Obviously, if you're going to utilize the funds from the sale of the rights as current cash flow within your corporation, those expenses will be deductible. Beyond that, your corporation can provide you (as the employee, and the sole shareholder) with retirement funds, which can also be deductible. These are options that you need to fully explore with your CPA and attorney, and a CFP as I suggested.
Hope this helps -
It does Jim.
Thanks
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Sun Jan 29, 2006 10:54 pm |
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