b'How to Legally Raise Private Moneydeduction or it will be disallowed. The rest of this chapter describes the most commonly used federal securities exemptions. INVESTOR QUALIFICATIONSBefore discussing the different exemptions, we need to define some of the terms that appear in this chapter. An accredited investor must meet one of the following standards: 7A natural person whose individual net worth or joint net worth with that persons spouse, at the time of the purchase of the interests in the company, exceeds $1 million, disregarding any positive equity in their personal residence. Additionally, any loans against the per-sonal residence taken out within the 60 days prior to a subscription and any negative equity in the personal residence must be consid-ered in the calculation of net worth.A natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with that persons spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.A bank, insurance company, registered investment company, business development company or small business investment com-pany.An employee benefit plan, within the meaning of the Employee Retirement Income Security Act (ERISA), if a bank, insurance com-pany or registered investment adviser makes the investment deci-sions, or if the plan has total assets in excess of $5 million. A charitable organization, corporation or partnership with assets exceeding $5 million.A director, executive officer or general partner of the company selling the securities. (This can be applied to the members of the management team who are involved in promoting the offering and running the company.)A business in which all the equity owners are accredited investors.A trust with assets in excess of $5 million that was not formed to 7 Per 17 CFR 230.501(a)50'