Topic: Get the Note - a digital token by Republic, a US company backed by Binance & Neo - page 8. (Read 3199 times)

I am a Canadian investor, can I participate?

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, and realize a gain, the capital gain (i.e., [sales price] - [basis]) is taxable.

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Thanks for the feedback! You are right and we always talk about it.

What if the company I invested in went bankrupt?

What if I invested in an LLC?

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,

When obtaining liquidity such as through selling a position,
When earning interest, or
When receiving and then selling a digital asset (token).
In these cases, the company you invested in (or its 3rd party transfer agent) will provide you with the necessary documents.

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.

Do Crowd SAFE holders get a K-1 at the end of the tax year?

RISK NOTE: payments are not guaranteed. The company may not have sufficient capital available to meet its payment obligations under the Crowd SDA, and the Crowd SDA is unsecured, meaning there is no collateral to which investors would have recourse in the event that the company is unable to meet its payment obligations.

Your return depends on your investment amount, the interest rate and the minimum return multiple amount detailed in the agreement. There is no guarantee of a return, as the company you lend to may not be able to service the debt and has not secured the debt with any assets.

Each company can customize its Crowd SDA, including or excluding certain provisions. Most include an interest rate and a minimum return multiple. If the Crowd SDA includes both an interest rate and minimum return multiple, the provision more favorable to the investor applies.

Key terms of the Crowd SDA include:

Annual Payment means an amount equal to or greater than the product of (i) the Loan Amount and (ii) the Interest Rate.

The Interest Rate is simple interest, paid annually, calculated based on the amount of your investment in the offering.

The Maturity Date is a future date, usually expressed as a number of of years from the Payment Start Date (as defined in the Crowd SDA). Upon the maturity date, the company must repay all outstanding interest and principal due under the Crowd SDA.

The Minimum Return Multiple is also determined by the company and defines the minimum total return which the investor is entitled to have received by the Maturity Date, expressed as a multiple of the principal amount.

Under the terms of the Crowd SDA, investors lend money to the company in exchange for annual interest payments during the term of the agreement. The company has the right to accelerate repayment of interest and/or principal, subject to a minimum return multiple (e.g. 1.5x the principal). If the company makes all interest payments due under the Crowd SDA, the minimum return multiple will be satisfied.

The Crowd SDA was created by Republic and is a debt crowdfunding-specific version of a typical debt agreement, a financial instrument widely used by angels, VCs and other accredited investors investing in startups.

A Crowd SDA is an investment contract between lenders (investors) and companies looking to raise capital. Individuals make investments in exchange for the chance to earn a return in the form of cash interest payments.

What is the Crowd Simple Debt Agreement (“Crowd SDA”)?

On Republic, public communications can happen on the discussion section of each campaign or in the comments to the company's public updates.

All communications containing or requesting new material information about the company or its business must be public and visible to all prospective investors.

After you invest in the company, the founders can message your via a private message, but these communications can not contain any material information about the company that's not included on the public campaign page.

The rule states that all communications relating to your crowdfunding investment must be in writing, through Republic.

For example, an investment commitment of $100 made on 1/1/17 for a campaign that closed successfully on 2/1/18, would count as being made and going against an investor's investment limit from 2/1/18 to 2/1/19.