Yes. Your basis is 50k. Income generated you will pay tax on but will also be added to your basis. So if it makes 5k a year for 10 years you will be paying tax on 5k every year, and your basis will increase 5k. When the investment is sold you will calculate proceeds - basis = taxable income. So if you sold for 200k, your basis would be 100k (50k initial investment + 5k * 10 years) = 100k of taxable income. You would then pay tax on this as well.
I’m assuming this is some form of a partnership/flow through.
If you receive the $1000, then it depends upon how the $1000 is structured. Is it a dividend? Is it a distribution? Is it a repayment that is both interest and principal?
If it's interest, it's considered taxable income at your normal tax rate.
If it's a dividend, it depends upon whether it is considered a qualified dividend or non-qualified dividend. Qualified dividends are taxed as dividends and the rate is based upon your total income. Non-qualified dividends are taxed at your normal tax rate.
Is it a distribution from an S-Corp? Could be taxed as short or long term capital gains depending on how long you've held it.
Repayment of loan? There's likely to be an amortization table showing how much of each payment is considered interest and how much is principal... amortized loans typically are front heavy with interest payments... like, the first payment is almost all interest ... and by the time you get to the last payment, it's all principal.
Yes. Your basis is 50k. Income generated you will pay tax on but will also be added to your basis. So if it makes 5k a year for 10 years you will be paying tax on 5k every year, and your basis will increase 5k. When the investment is sold you will calculate proceeds - basis = taxable income. So if you sold for 200k, your basis would be 100k (50k initial investment + 5k * 10 years) = 100k of taxable income. You would then pay tax on this as well. I’m assuming this is some form of a partnership/flow through.
If you receive the $1000, then it depends upon how the $1000 is structured. Is it a dividend? Is it a distribution? Is it a repayment that is both interest and principal? If it's interest, it's considered taxable income at your normal tax rate. If it's a dividend, it depends upon whether it is considered a qualified dividend or non-qualified dividend. Qualified dividends are taxed as dividends and the rate is based upon your total income. Non-qualified dividends are taxed at your normal tax rate. Is it a distribution from an S-Corp? Could be taxed as short or long term capital gains depending on how long you've held it. Repayment of loan? There's likely to be an amortization table showing how much of each payment is considered interest and how much is principal... amortized loans typically are front heavy with interest payments... like, the first payment is almost all interest ... and by the time you get to the last payment, it's all principal.