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Selling shares in US company - GCT loan offset?

I'm selling my shares of a US company. I have a (poorly/undocumented) loan outstanding.

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I'm in the process of being pushed out of a business I co-founded (a US Corporation), and have decided to settle for $90k. $70k is them buying out my shares, and $20k will be to repay money I lent the business several years ago, which was never properly documented.

The sale agreement is for the whole $90k for them to buy my shares, and a separate accord terminates the loan.

Obviously I want to minimise the capital gains tax and not pay it on the whole $90k - is it possible to offset the 'cancelled' loan from the CGT? (Being that it's US and not UK based.) 

Replies (7)

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By johngroganjga
27th Mar 2020 18:58

Logically you are selling your shares for $70k and your $20k loan is being repaid. How is it that the documents say something different?

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Replying to johngroganjga:
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By tomweb
27th Mar 2020 20:38

Thanks for your reply, though the initial negotiation was to agree the $90k based on 70 + 20, the sale documents have turned out to be selling all the shares for 90k, it turns out to 5 different employees, in various proportions. With a separate accord document to cancel the loan (and that no side will claim against the other, etc.)

There isn't any scope to change how it's structured at their end, it's take it or leave it, so my question is more whether I can just put documentation showing the loan figures in my CGT calculation in self assessment.

Obviously it's probably more complex than that and I'll have to see an accountant or adviser, which is hard as everything's closed round here and I don't have any relationships.

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Psycho
By Wilson Philips
27th Mar 2020 20:14

“them to buy my shares”

Who are “them”?

I would also suggest that if you are about to receive $90k, albeit before tax, you can probably afford to pay an adviser to help you structure things in the most tax-efficient manner.

Folks here generally don’t take kindly to requests for free advice from the public. At a time when livelihoods are on the line, for both advisers and their clients, such requests are - I imagine - going to be treated with even greater disdain.

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By tomweb
27th Mar 2020 20:39

Thanks for the advice.

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Replying to tomweb:
Psycho
By Wilson Philips
27th Mar 2020 21:39

Don’t get me wrong. I’m one of those that would be willing to help but things are rarely as straightforward as they might seem.

You have assumed that the disposal of the shares will automatically be treated as a capital disposal. That isn’t necessarily the case, hence my query as to who “them” are.

In any event, if the disposal is a capital one, I suspect that there would be no recognition of the “loss” on the loan.

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Replying to Wilson Philips:
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By tomweb
27th Mar 2020 22:23

Thanks for your response, I appreciate it. The documents are for the sale and purchase of my stock (Transfer Shares) in the Corporation. What determines whether it's a capital disposal? And what would it be if that wouldn't be the case?

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Replying to tomweb:
Psycho
By Wilson Philips
27th Mar 2020 22:50

If it’s a sale to others then it should be capital. Checking that it wasn’t a buy back by the company/corporation

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