If I invested $100,000 (20% partnership) in a firm and, after some time, the company grew. That 20% stake is now worth $500,000 or more. Could this be considered a qualifying investment for the EB-5 category?
An EB-5 investor can invest their personal funds into an NCE/JCE and become an equity owner. Your investment is at-risk. However, your investment must have the possibility of obtaining a gain or loss. Your ownership value may increase but there can be no guarantee by the NCE/JCE that there will be any return of any part of the principal amount of the original investment.
No, because the return on your investment would be derived from business earnings. If you took a net profit dividend from the company, paid any necessary taxes and then re-invested the additional amount of funds from your personal monies, then that may work.
No, unless you take the $500,000 in retained earnings out as profits, pay income taxes on them and then reinvest them in the company, that is not likely to happen.
The scenario as described will not suffice as an investment under EB-5. Advisably, consult an EB-5 attorney on the issue of equity investment as it is usually worthwhile if it is properly planned.
Retained earnings cannot qualify. If the investment has appreciated, you have to sell it and make a new investment in a new commercial enterprise that could qualify.
In order to meet the minimum requirements, you would have to show that you invested a minimum of $500,000 in a new enterprise located in a targeted economic area. You would have to do so at the outset and not show that the value of your initial investment grew. It may be possible to take out your 20% stake now worth $500,000 and invest that into a Regional Center project and still qualify.
No, unfortunately not. In order to qualify for the EB-5 Immigrant Investor processing, the investor must invest the full minimum capital requirement ($500,000 for targeted employment area or $1 million outside of TEA), not the value of the invested stake/business.
If the company pays you dividends, which you then reinvest into the company, it can be fashioned into an EB-5 qualifying investment.
No, the EB-5 investment must be $500,000 if the business is in Targeted Employment Area. Thus, if that business will give you the $500,000 that is your equity, and you invest into a new business or a spin-off company that will create 10+ full-time, permanent jobs, then you could do that, but having had invested $100,000 will not make you eligible for the EB-5 benefits. You should consult with an experienced EB-5 attorney to discuss various strategies considering all legal ramifications and options.
Unfortunately not. Your investment is still $100,000. You can realize the $400,000 gain, pay taxes on it and then reinvest it back into the company, presumably for more shares, in order to result in a $500,000 investment for EB-5 purposes.
No. Not unless you withdrew the profits, paid taxes on them and then reinvested the money back into the company.
