Green's Entrepreneurs Network
HomeRaising Money
Robert Green created Active Investors, a tax-advantaged investing strategy and used it successfully when he purchased a French industrial company. Green modified it for Green Energy Active Investors too.
Use this strategy to recruit investors to your business. These investors don’t just invest money silently, but rather they work actively in your business too. That’s the key to unlocking tax benefits for them as well; otherwise they are “passive” and subject to “passive activity loss” restriction rules.
Active Investors Tax Strategy created by Robert Green.
Using our Green Active Investors tax breaks, Green & Company focuses on tax-advantaged private-equity investments in small businesses. It’s a home-run solution in this difficult credit crisis, recession and high-tax environment.
Picture raising money from friends and family with limited paperwork and very few strings attached. You’ll compensate your active investors in the early years primarily with tax losses, rather than cash. Your active investors can provide your business with special assistance, knowledge, work, contacts and influence so everyone can be more successful sooner rather than later.
The tax magic of active investors is accelerated business write-offs and tax credits. Most of all, active investors won’t be subject to onerous “passive activity loss” rules, so they enjoy these tax breaks up front. Your active investors will get the same tax breaks up front as you. They can write off their own home-office, travel, business, entertainment and other expenses.
With tax rates headed higher on upper-income groups and the green energy revolution taking shape, this convergence of ideas is a winning formula for new business success.
Green's Entrepreneur Network and Green & Company offer everything you need — new business ideas, business development, tax and legal help, annual accounting, tax compliance and tax opinions.
Some larger private equity deals can be a hybrid of active investors and traditional private equity (passive) investors. In the LLC investment pool, the entrepreneur owner can own Class A interests, active investors Class B interests and passive investors Class C interests. Class A has voting control, Class B gives active investor tax breaks (with special allocations), and Class C features more traditional private equity returns.
Green created active investors in the late 1980s as part of a client-led acquisition of a French industrial company with an exciting green energy division. Green & Company bought the French firm out of the Paris bankruptcy courts, enabling the company to write off the entire investment as a restructuring cost. A client of Green & Company had been the CEO and majority owner before bankruptcy.
The active investors in the U.S. management company who invested in the French firm all played useful roles managing the company. Each invested $50,000 in cash up front and $75,000 in expenses over a three to five year period. Tax rates were higher in the 80s, and all the investors made money on the tax benefits alone within several years. This occurred after the passive activity loss rules were effective — using our active investor idea, which navigates around the passive-activity loss rules. There were never questions or trouble from the IRS. There was a rock-solid tax opinion as well.
Click here to learn more about Green's Active Investors strategy with private equity.
