Re: human capital market

Harvey Newstrom (
Fri, 27 Feb 1998 10:25:42 -0500

Robin Hanson wrote:
> Harvey Newstrom notes:
> >My partner and I have incorporated as an S-Corp. We have 100 shares of
> >Stock in our future income stream. We could sell these shares to anyone
> >under any contract arrangements we wish.
> Cool. But does this cover all future income, or just income earned via
> this corporation? And is this a percentage of gross income, or only after
> certain "expenses" are deducted? And could you contractually commit to
> retaining at least say 60% of your income shares, so buyers have reason
> to believe you will work hard?
> Unfortunately, bankruptsy is a bit too easy. And people might reasonably
> fear that you were offering them this very unusual asset because you know
> something unusually disappointing about your future income prospects.

Very good points. In our case it only covers current income for our
S-corp. This is pretty standard. I think that any of these other
desires could be contracted with the purchase of the stock, or written
into the Corporation. It is possible to contract a non-compete
agreement so that all my income must go through this Corporation. I'm
not sure how to avoid the bankruptcy issue, because any business can
fail at any time. Generally, I think anything you want can be hammered
out by lawyers and defined in contracts the way you want. My point is
that an S-corp is pretty close to a personal corporation with limited
ownership in which you can sell profit-shares to others.

Harvey Newstrom <>
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