In order for an enterprise to be considered marginal, the evidence must show that the enterprise generates significant employment or more than enough to financially support the investor and his dependents, if any. The standard to make a determination as to what level of income is necessary is to look at the annual household income within the enterprise’s home state. Generally, the income from the enterprise must be higher than the household income average. In cases of a new enterprise, it may be best to hold off submitting an E-2 petition until a couple of months of profit can be produced through the enterprise’s balance sheets.
Develop and Direct
While the investor does not have to be actively involved in all aspects of the enterprise, the investor still must take part in the decisions that drive the daily operations of the enterprise. As such, a passive investor that simply invests in the enterprise but does not contribute to the management of the enterprise will not satisfy the requirements of being in “control” of the enterprise.
Financing an E-2 Investment
When investing in an E-2 enterprise, the regulations allow for a portion of the investment to be financed. While the regulations do not specifically state what the exact percentage of financing allowed is, the general recommendation is that, in investments over $100,000, not more then 20-30% of the investment should be financed. In investments less than $100,000 it is recommended that none or only a small percentage of the investment be financed.
Gifts or Inheritance
One question commonly asked by potential investors is whether funds obtained through gift or inheritance may be used toward the investment. The general rule for E-2 purposes is that any funds or capital used by the investor must be within his “possession and control.” What that means is that the funds used must be either owned solely by the investor. As such, gifts and inheritance may qualify as long as the funds are given completely to the investor and well documented through wills, estate settlements, or tax registries.
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