Did you invest in a Republic offering in the last year or before? Curious as to how your investment may impact your taxes? While Republic cannot give you tax advice, we will provide you with some general information and resources. We hope you find these guidelines helpful.
Tax liability is largely determined by what type of entity you invested in:
The first step is to determine whether you have invested in a C corporation or an LLC. You can find this information on each company's Form C, which is attached to the deal page offering.
What if I invested in a C-corporation?
In general, U.S. investors investing in C-corporations on Republic will only need to report income when they realize a gain or loss for tax purposes and no K-1 is due to you. In other words,
In these cases, the company you invested in (or its 3rd party transfer agent) will provide you with the necessary documents. Republic won’t be sending any tax forms to you.
What if I invested in an LLC?
If you invested in an LLC and you currently hold a Crowd SAFE, Token DPA or other security, no K-1 is due to you. If your Crowd SAFE has been converted, you should reach out to the issuing company for a K-1. If your Token DPA was repaid in Tokens, you should consult with your own counsel to determine if you have any tax liabilities.
What if the company I invested in went bankrupt?
The company or its trustee is responsible for providing you tax documents to reflect the loss. Republic may assist these companies in distributing tax documents, but cannot create them or secure them until there is court approval of the winding up of the business.
What if I sold the security I acquired on Republic in a private transaction and realized a gain?
Once you sell a capital asset, such as Crowd SAFE, and realize a gain, the capital gain (i.e., [sales price] - [basis]) is taxable.
What if I sold the security I acquired on Republic in a private transaction and realized a loss?
Once you sell a capital asset, such as Crowd SAFE or a Token DPA, at a loss, the capital loss ([basis] - [sales price]) qualifies as a capital loss and can be used to offset capital gains (and in some cases, ordinary income).
For further information, you may consult the following resources:
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Republic does not verify information provided by companies on this Portal and makes no assurance as to the completeness or accuracy of any such information. Additional information about companies fundraising on the Portal can be found by searching the EDGAR database.