Yes, I'm not sure what he's talking about here. The IRS can't dictate how much you sell something for.
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.
Reason could be fiduciary duties owed by directors of the dad’s company. As a director you can’t give away company assets at below market value, without shareholder consent. If there were shareholders in the company other than the dad, then those shareholders could have sued the dad for breaching the duties he owes to the company. So if the other shareholders refused to give informed consent to a below market value deal, the only way for it to happen was to do a deal that made those shareholders happy.
Of course, they just shouldn't have included CD Baby as being owned by the other corporation. But, assuming there was some unspoken reason that had to happen, The other shareholders would have needed to be involved in the initial purchase/loan as well.
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.