How do you Treat the New Kid on the Block?

First, if anyone has sent a qualification questionnaire in the last 3 weeks and did not get a response- it was eaten up by the email goblins who sent it to a black hole somewhere. After receiving a call from someone who thought I just wasn't getting back to them as promised, I discovered the email program had decided to just completely break down. It is fixed as of today, and all is back on track. I really hate it when that happens, and it does seem to happen at least twice a year without warning for some reason no one can figure out.

The last few months have certainly brought major changes in the Capital Gains Tax Savings arena. It has become an ongoing evolution and is definitely to the benefit of the seller, as the problem has not diminished as far as the taxes owed if an appreciated asset is sold outright. Not everyone welcomes change, however, and as is all too common - change breeds controversy.

I have come up with an analogy that I believe will describe how different people tend to approach new concepts. It's just a fact of human nature I guess.

Here goes...

Let's say there is a neighborhood full of kids from different families. Some kids have lived there all their lives, some for quite a few years and some are fairly new. They may have some basic disagreements amongst themselves, but they pretty much are able to co-exist with the occasional argument or conflict.

Then a new kid moves into the neighborhood. He's a good looking fellow on the outside, but no one knows much about what he has to offer on the inside because he just showed up in town.

Some of the kids will be eager to shake is hand and look forward to getting to know him better. They'll invite him over, ask him questions and see if he fits into their crowd. They welcome new blood and hope the new guy can bring something positive into their lives. They make the effort right from the start.

Another bunch of kids will keep their distance for a while. They won't introduce themselves right away - they'll watch and see how he seems to fit in with the first group. If all goes well, they'll invite the new guy over when they feel more comfortable opening up. If they see that the first group really doesn't care all that much for the new kid after getting to know him better, they probably won't bother to make an effort later on themselves. They're the wait and see types.

Then there's a third group that is suspicious of anyone new right from the start. They don't want to get to know the new guy- they'd rather just assume he won't fit in and maybe will even make fun of him or try and trip him as he walks by. They're happy with their life as it stands and the group they already know. Plus, someone that good looking probably doesn't have much else going for them anyway, right? Who needs a new friend when they're just fine as they are. They are the nay sayers. It's easy to criticize right from the start.

Back to capital gains tax saving land. The new kid on the block is the Installment Sale Through a Foundation.

There are those who can't wait to find out all about it and how it can benefit them or their clients.

There are those who don't have much of an opinion yet either way. They'll wait and see how it's accepted over time.

And there are those who have taken a stand that they don't think it could possibly have any merit whatsoever- so rather than getting to know how it really works- they prefer to start calling it names and warning others to steer clear. There's got to be something wrong with it right? Even if they don't know exactly what that might be yet. Surely there's got to be something!

I happen to be a member of the first group. Whatever new strategy becomes available I want to be the first to find out all about it. I'll ask questions until I run out. If there is something that could be better, I'd rather ask what can be done to make it right? It's only then that I'll really know if the new kid is worth hanging out with and introducing to my other friends.

As a matter of a fact, so far I like him a lot. He's a work in progress but he has a whole lot more to offer than the kids throwing the stones, and, he's a lot more pleasant to be around.

I'll be launching my new educational product "The Definitive Beginner's Guide to Potentially Saving Hundreds of Thousands of Dollars in Capital Gains Tax" just in time for the holidays. Stay tuned.

Paula Straub
askpaula@savegainstax.com

Qualification Questionnaire (now working again)

My Pain is Your Gain

It's been a bit longer than usual since I've posted. This is mainly due to more great changes in the capital gains tax saving arena.

Ever since the Private Annuity Trust was discontinued, a lot of professionals have been working overtime to come up with better and better options.

The most recent (effective 12/15/06)is the best yet. Although each time a client can benefit more I'm jumping up and down, I've done a bit of personal grumbling as I have to constantly update my sites, posts and even postpone the launch of my new product- which was due out today.

The new strategy is an installment sale through a foundation, and the thing that has recently changed is the foundation itself. The reason is that the new foundation does all the things the other one did but returns more to the client because it contains costs at a more effective rate.

I'll be holding a special telecall next week to explain in greater detail,and I will be posting more as time allows. Just know that it gives you the maximum savings and return allowed under current tax law and beats the pants off of the other choices out there (except the 1031 exchange for investment real estate).

I also hope to launch my "Definitive Beginners Guide to Potentially Saving Hundreds of Thousands of Dollars in Capital Gains" before the end of December. It's undergoing last minute revisions so the information is brand new and relevant.

I'll keep you posted!
Paula Straub
760-917-0858

Qualification Questionnaire is available to find out what strategies you qualify for.
Free Report

The Best News to Date for Capital Gains Tax Savings!

This is so awesome!

You may have heard the saying "when one door closes another
one opens". I believe this has truly been the case regarding
recent developments in the capital gains tax savings arena.

Initially, when the Private Annuity Trust was discontinued by the
IRS I hoped they would come to their senses and bring it back
shortly.

Now, with the option that has just become available as I write
this, even if they brought it back tomorrow, I don't think it even
compares in benefits.

If you could sell your asset, get an immediate charitable
deduction, have a decent portion of your capital gains tax
obligation forgiven forever, possibly have your closing costs paid
for, receive a guaranteed series of payments with principle and
interest over a number of chosen years, have the asset removed from
your estate and the remainder still pass to your heirs on death,
and your favorite charity receive money to boot- would that appeal
to you?

If not, quit reading now and pay your taxes. It's that simple.

Combining tax law from IRS codes 453, 1011 and 503C- the structured
sale through a foundation has been born.

Do yourself a huge favor, and don't even think of selling your
asset before you see how this will maximize every legal tax benefit
in existence.

I am devoting a Special Teleclass this Thursday to go over the
concept in more detail and answer questions.

Believe me, you don't want to miss this. You may
not only be the first one on your block to know about this, but the
first one in your entire city or state!

If you're not on one of my mailing lists, send me an email for the link to sign up.

Can you tell I'm excited? I'm over the moon!

Talk to you soon,

Paula Straub
askpaula@savegainstax.com
760-917-0858
KeepYourCapitalGains

Thanksgiving Wishes and Thanks

I believe it's a good idea to just take a day and be truly grateful for whatever blessings that we do have in life.

Thank you for giving me the opportunity to educate you and to keep you up to date and informed on the latest capital gains tax strategies. I so appreciate whenever you take the time to send an email or chat in person.

There have been a great deal of changes on the tax front this year, and most have been for the good once the dust has cleared. 2007 promises to be an even better year for helping clients hang onto more of their profits.

I am personally thankful for surviving a "No Change" IRS tax audit this week. All I can say is that it pays to follow all the IRS rules and to keep good records and documentation!

Even though I did things correctly, I spent many hours preparing all of the documentation requested and dreading the unknown. I don't wish this experience on anyone, but you honestly don't know when your number will come up during the "random" audit selection process.

If you don't know what you need to do when filing taxes, be sure and hire someone competent who does. You too will be thankful when everything is picked apart with a fine tooth comb and they go away satisfied.

Have a great Thanksgiving Holiday.

Warmly,
Paula Straub

Part 3 of 3 - Origin of the Insured Structured Sale

Part 1 covered the basics of an Installment Sale. Part 2 explained the concept of a Structured Sale. Part 3 will now go over how the combination of the first two concepts has become the Insured Structured Sale as it exists today.

Using the example of a 500K sale of real property, here’s how the Insured Structured Sale might work.

Assume this property is owned free and clear. A buyer is found and an agreeable sales price is determined (500k).

Prior to close of escrow, an Assignment Company meets with the buyer, and the buyer assigns the obligation for making payments totaling the sales price to the seller. The buyer pays his 500K to the Assignment Company and his sale is complete.

The Assignment Company now enters into a contract with the seller to make payments to the seller over a certain amount of years at an agreed upon interest rate.

Capital Gains Tax and recaptured depreciation is deferred, and paid back in small chunks as payments are received.

It is at this point the Insured Structured Sale is differentiated from the Structured Sale described in Part 2.

The Assignment Company now is obligated to make the agreed upon payments. They will in turn back their obligation with quality commercial annuities, but they are not obligated to purchase any particular product, nor does it have to be a Single Premium Immediate Annuity.

This is important, because with the range of annuities on the market today with principle guarantees and living benefits, as well as better liquidity, it gives the Assignment Company the ability to be much more flexible with the Sales Contract, making the terms much better for the seller.

Each case can be viewed individually and the best product for each unique situation can be utilized. Age, length of term, income needs, liquidity needs and growth factors can all be taken into consideration.

Since the annuity will not actually be annuitized, any remaining assets will pass to the heirs upon death.

The seller is not locked into a low interest, non-flexible product for the duration of the contract term. He is assured that all monies will be returned to him and/or his heirs with interest over time. There can even be provisions made within the contract to revisit the terms at benchmark dates and possibly revise the contract for purposes like inflation rates, etc. depending on the asset performance.

The fees involved are on a flat fee basis, no matter what the amount of the original sales price.

These are just the basics of this new strategy, and more examples will follow as cases unfold.

It is also important to note, that to the best of my knowledge only one Assignment Company offering this option exists at this time. Over time, you may see others follow.

The Insured Structured Sale really is a good alternative to the Private Annuity Trust, and in some cases, if the PAT is made available again in the future, I believe the Insured Structured Sale may still be the choice of many with Capital Gains Tax concerns.

I’ll keep you posted.

Paula Straub
760-917-0858
askpaula@savegainstax.com

ps. Find out if an Insured Structured Sale can benefit you. Fill out the Qualification Questionnaire and get a confidential and timely personal response.

Part 2 of 3 - Origin of Insured Structured Sale

Part 1 covered the basics of an Installment Sale. Part 2 will explain the concept of a Structured Sale. Part 3 will then explain how both the Installment Sale and Structured Sale have led the way for the Insured Structured Sale.

Let's say we are selling a piece of real estate for this example. A buyer is located and a sales price negotiated. Instead of the buyer making payments to the seller over time, the buyer can assign his obligation to make those payments to an Assignment Company.
The buyer effectively gives the sale proceeds in a lump sum to the Assignment Company, who in turn agrees to make payments back to the seller over a certain period of time and at a specific interest rate. Thus, the risk is transferred to the Assignment Company and away from the seller.

The seller only has to pay capital gains tax on the amounts he receives as principle as he receives it in the payments from the Assignment Company. He has no access to the bulk of the money, so no constructive receipt has happened.

Until very recently, the only Assignment Companies offering structured sales were owned by large insurance companies. The Assignment Company re-insured itself by investing the funds into a Single Premium Immediate Annuity with the associated insurance carrier. The annuity was then annuitized over the length of the contract and payments were made from the insurance carrier directly to the seller via another agreement.

The interest rates of an immediate annuity are fairly low, but the payments are insured by the carrier. If you chose the lifetime payout option (which would have the highest monthly payment), whenever you passed away whatever money had not been paid out to you was kept by the insurance carrier.

Again, this option is still available and can be used to spread out the payment of capital gains tax.

Part 3 will discuss a newer and more flexible version of the Structured Sale. It takes the good parts of the Installment Sale/Structured Sale and improves on some of the downsides as well.

Paula Straub
askpaula@savegainstax.com
http://www.savegainstax.com/
760-917-0858

p.s. If you need to determine how much you can save in capital gains tax, fill out the Qualification Questionnaire and get a quick and confidential personal response.

Part 1 of 3 - Origin of Insured Structured Sale

I thought it best to break down how the Insured Structured Sale has come into being into a 3 part article. I think it will give you a bit of insight on just how powerful a concept it actually is, and that it is a great alternative to the Private Annuity Trust, which is currently unavailable for use, as of 10/18/2006 until further notice.

In this article, I'll give the basics of an Installment sale which follows IRS guidelines, section 453. It is not my intent to go into IRS code specifics here or technical jargon, only to relay the concepts to make them understandable.

Part 2 will feature the basics of the Structured Sale, and Part 3 will show how both Parts 1 and 2 have emerged into the Insured Structured Sale.

In its basic structure, and I'll use real estate as an example, the Installment Sale is basically an agreement between the buyer and the seller for the buyer to make payments back to the seller over a stated period of time, with a specific interest rate until the agreed upon sales price has been fulfilled.

For example, the seller sells a property for 500K to a buyer. Instead of the buyer getting a mortgage or paying cash for the 500K, he/she agrees to make monthly payments over say 30 years to the seller at 6% interest rate. The seller is effectively the bank.

The seller only has to pay capital gains tax as he/she receives portions of the principle in payments, thus spreading out the tax obligation over a number of years. That is the upside.

The downside might be if the buyer quits making payments, or refinances the obligation. In this case the seller either has to take legal measures and possibly get the property back after time and expense, or receives a lump sum which causes all remaining capital gains tax to be due.

There are all sort of variations on this example, but hopefully you get the gist. This option is still available, but for a person setting up their retirement, it may be too risky.

Next, in Part 2, I will explain how the risk can be successfully transferred via a Structured Sale, but the reward my be less than ideal.

Paula Straub
askpaula@savegainstax.com

ps. I welcome your questions and comments. If you can't wait for Parts 2 and 3 give me a call and I will give you the details. 760-917-0858