Transferring assets to the LLC is a taxable event, individual contributing must pay the capital gains of the assets at that point. How do you kickstart this process without getting your arse kicked…
Also, just saw that Strike is now allowing you to take collateral off the table. If LTV is under 40% you can drag it back up to 60%. Any thoughts on using that capability or just waiting to roll the loan at term.
I’m struggling to make a comparison of whether or not I should be paying down the loan or not.
Replies (3)
Not taxable for a single member LLC. The LLC is basically an extension of you. I also loaned it to the LLC at fair market value repayable in Bitcoin or cash. This effectively let's me get the cash back out tax free leaving the LLC the Bitcoin to borrow against and fly wheel indefinitly. Plus LLC received the Bitcoin at my cost basis and could sell at long term capital gains rates if it wanted too..
Say you donate 1M worth of Bitcoin to your LLC. The first 1M you take back out is simply a return of capital.
There is basically zero issue doing this for a single member LLC. Its a different story for a C-corp but still not impossible to do a capital contribution, but you then lose all LTCG benefits and simple pay corporate tax rates.
The main issue with my original post is PHC rules for passive income as a C-corp.. but that part is separate from LLC and Bitcoin.
Still a benefit for deductions like health insurance but you effectively have to return all profits... strangely if you trade options yourself you can avoid this....but if you use a covered call ETF you effectively pay 49% tax!!!!
Us tax law is complex AF! For sure make AI show you relevant tax codes if you use it to brainstorm.
Roll the loan or not... My simulations always favor rolling loan and keeping the debt.
Not sure I like that idea into an extended bear market though. I will be paying down debt in mid to late cycle. Then
increasing debt after larger pull backs. Always staying below 10%LTV for now.
