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Home Forums Startup Investors General – Investors Republic Announces the Note Profit-Sharing Token! Reply To: Republic Announces the Note Profit-Sharing Token!

  • Brian

    July 3, 2020 at 2:47 pm

    Great question. I asked during yesterday’s AMA if Republic would be providing tax advice, and Kendrick Nguyen (CEO of Republic) said: “Note holders will be responsible for their own taxes but will provide some guidance and hopefully product support down the road.”

    If I had to guess, based on what I currently do for other tokens that I hold, it might look something like this (obviously everyone’s situation is unique, this is NOT tax advice):

    1. When you initially purchase Note tokens, that will be treated as the cost basis for your investment (the same as if you purchased stock)
    2. If you receive Note tokens for free – i.e. from converting your Reward Notes to Republic Notes at a 1:1 basis, you may have to claim that as ordinary income. However, if you consider it as a gift, the IRS gift limit in 2019 was that you don’t have to claim it if it’s up to $15,000
    3. For distributions, I’m guessing those would be treated as ordinary, non-qualified dividends, taxed at your ordinary income rate. There is a chance that they may structure it such that they would be considered qualified dividends.
    4. If you later sell your Republic Notes for a loss or gain, you’d be responsible for long-term and/or short terms gains or losses, the same as stock.

    Again, those are just my assumptions as of now. We’ll have to see how they actually set it up.