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Rookie founding question - How does the IRS value my shares when incorporating?

Hi all, new to the community. Thanks for the support...

I'm looking at creating a C-Corp, and issuing stock to the founders. We want to do our 83b to exercise right away. From what I've seen, the IRS will look at income as the gap between par (hoping to make it low, like $0.001 per share) and fair market value.

But how do I know what fair market value will be? Do I need to do a 409a - with no product, no revenue, no assets?

I want to be careful to not get stuck with a big tax bill as we're trying to put money into getting our new thing going. Anyone have experience here?

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    Hey Jim,

    I'm a founder as well so this is by no means accounting or legal advice.

    It is my understanding that when you file an 83b the fair market value will be the same as the par value. The idea is that you are purchasing your stock right at company inception, when the fair market value of the stock is the same value assigned to it in the incorporation docs (the par value). The founders made it crystal clear we paid for the stock (there were 2 founders each with 40% of the company with a par value similar to yours, so we each wrote check for $40, took pictures of them, etc..). Hope this helps!

    1. 1

      That is fantastic, thanks for the help! Want to make sure Uncle Sam doesn't show up with a big surprise for us on tax day next year. Appreciate it!

      Mind sharing your startup that you're working on? Would be curious to look

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