Reverse Repurchase Agreements might become the standard of practice in startup capital formation and startup tax accounting. This concept properly balances the competing interests of all stakeholders, including tax authorities, to solve a core problem with startup finance. Without Reverse Repurchase Agreements between startups and seed capital investors cash payments to investors are usually mistakenly accounted for as taxable dividends long before the investor has realized any actual return on investment. With Re-Repos, startups will be able to make cash distributions to early investors and account properly for this return OF capital until such payments become a return ON capital.

1. New
Assets
Company's
Capital $
Investment
(Startup
Capital)
Revenue-Generating Assets
$
Investor
Startup
Capital
Public Startup
Co Total Liquid $
Capitalization
New
Assets
New
Assets
New
Assets
$
100% of
Startup Capital
Invested by
Public Startup Co
Will be Returned
for Re-Investment
Before Each Startup
Recognizes Any
Net Revenue –
Startups Are
Not Taxable
Until Profitable
$ Return OF
Startup Capital
$ Return ON
Startup Capital
Net of Royalties,
Revenue-Sharing,
Contract Payments
Revenue-Generating
Assets, Ø Cost Basis
Contract Payments to
Partners for Royalties,
Revenue-Sharing, and
Past Equity Investment
$ Provided
To Company
Via Share
Distribution,
Not Dividend
Public
Startup
Company,
Inc. Holds
Startup
Founders'
Shares &
A Reverse
Repurchase
Agreement
(Each New
Asset is a
Startup)
$ Paid to Company in
Taxable Dividends – or
Capital Gains if Shares
Sold at 100% Net Profit
Due to Zero-Cost Basis
Investors Hold Shares & Revenue-Sharing Contracts
Public
Startup
Company, Inc.
ReRepo Model
Investors Are
Partners with
Each Startup,
Investors Are
Also Owners
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