My $3.3M Mistake (2009)
sivers.org
sivers.org
One cannot cause another party to onw their own business through essentially a clerical error. Contracts are created out of a meeting of minds, without a shared understanding there could be no agreement. It might have been a gnarly account / tax mess to clean up, but that should have been the extent of it.
Of course, usually, it's hard to prove that you didn't know what you were singing. The other party can just say, "ya, that was what we talked about then we drew up that contract."
Not buying this...
His father should have told him that he was taking ownership of his company for the loan. The fact is, the guy loaned him $20K, had him sign "paperwork" and didn't tell him is the issue here -- pretty sure right there what he signed was a loan and sales of 90% of the company.
I've read Siver's stories over the years. Entertaining and certainly one of the Ruby guys to listen too... but this is just a bit of a stretch to say "I'm not mad at my Dad." -- he should have been furious unless he knew and this is just another one of Derek's "stories".
Dad sounds like he wasn't forthcoming with what Derek was signing -- or maybe Derek knew and needed a good blog post?
Not here to throw shade at the dude and I think he definitely has some gems in his blog, but it’s also showing the best self and not necessarily the real self.
As far as the story indicates, the separation between CD Baby and Hit Media was just in the author’s head. There’s nothing wrong with that, and I believe him, but the IRS would not. There would be too much incentive for people to generate complex recollections. Not to mention the trouble with business partners whether or not they are family.
They can, however, impute market value. So yes, they could make you pay gift tax. But he says he paid back the $20k loan. Either the $20k was a loan or it was used to purchase shares. It can't be both.
Also, merely depositing money into a specific bank account has no bearing on who or what entity owns the company. You could simply account for the CD Baby funds separately and file separately. Just like lots of small businesses will use their personal bank account for both personal and business funds. Not a good idea from a bookkeeping perspective. But legally and IRS-wise, there is no problem as long as you keep track of things.
There could be a lot of reason's he would have this issue of not being the primary owner of CDBaby. But none of the reasons given are valid ones. Perhaps daddy money bags wanted his cut but instructed his accountants to make up a reason why he had to get $3.3 million without letting the son know that he really just wants a return on his investment.
The author was taking all sorts of steps that are far beyond what's done in the average person's financial sphere. Pleading ignorance is.... well, ignorant.
But if you insist, let's review a few of Donald Trump's accomplishments:
- Won the Ellis Island Award for contributions to minority communities
- Has a star on the Hollywood Walk of Fame
- Has written (ok, has his name as author) best selling books
- Built (and destroyed, and rebuilt) massive enterprises that employ tens of thousands
- Sawed through the Republican party establishment, then defeated the Democratic nominee in spite of massive disadvantages and polls.
- Was elected US President as the first political office sought
- Has presided over a booming economy that brings record low unemployment to African-Americans and Hispanics, accompanied by rising wages and a roaring stock market
It is certainly true that Donald Trump was born with a silver spoon in his mouth and many huge advantages. The same is true of many other politicians of both parties, but few (are there truly any?) can match the breadth and depth of accomplishments listed above.
You can dislike Donald Trump, and/or his politics as much as you want. But you can't deny he has accomplished a lot, even for someone born to wealth.
Really...because it sounds like your dad's shady schemes cost you a huge amount of money?
[1] In my experience people consider starting entrepreneurs likely to fail. So it might be as well that FFF round is considered a gift from the investor.
Sad, because a large part of the early history of the internet is wrapped up in stories about people like Derek Sivers and his company. Perhaps it is a pre-requisite for most startup courses to have a history lesson around those days?