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How do I prove that my business is in distress to sell to an EB-5 investor?

I am interested in selling one of my businesses to an EB-5 investor through the direct investment route. How do I prove that my business is in distress and how is "net loss" of 20 percent specifically defined?

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    Julia Roussinova

    Immigration Attorney
    Answered on

    A troubled business must be in existence for at least two years and has incurred a net loss for accounting purposes during a one year or two year period before tge I-526 petition is filed on behalf of an EB-5 investor. The loss is established based on the generally accepted accounting principles and must be equal to at least 20 percent of the business net worth before the loss. You should consult an experienced EB-5 practitioner who will work with a CPA and an economist to examine the business'' income tax returns and qualify the business as a troubled business.

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    Ed Beshara

    Immigration Attorney
    Answered on

    Your EB-5 immigration attorney will advise you with the assistance of EB-5 team members, such as the economist, certified public accountant, as to the viability of the business and the required employment creation and the potential EB-5 investors.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    The net loss is determined through accounting methodology. Immigration attorneys who focus on EB-5 often coordinate and lead a team of professionals (like CPAs, corporate attorneys, business plan writers, and economists) to create approvable EB-5 infrastructures and documentation.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The definition of a "troubled business" is such that the net loss for accounting purposes must be demonstrated on the new commercial enterprise''s income tax returns for the preceding 12- or 24-month period. You should have a CPA or other financial expert review your company''s tax returns for the last two years in consultation with an experienced EB-5 immigration attorney to determine whether or not the business can be considered a "troubled business" for EB-5 purposes.

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    Karen-Lee Pollak

    Immigration Attorney
    Answered on

    A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss for accounting purposes during the 12- or 24-month period prior to the priority date on the immigrant investor''s Form I-526. The loss for this period must be at least 20 percent of the troubled business'' net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

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