Happy Thanksgiving! Just wanted to send a quick note to let you know how thankful I am for all my subscribers. In turbulent times such as these, I know I have to stop and count my blessings for the things I do have.
I have been a little remiss on sending updates on capital gains tax issues and on what may be changing in the next year or soon after. A lot is still up in the air as the feds try and stabilize the economy and the credit markets but I’ll keep you informed.
The best spot to keep abreast is to listen to my weekly radio program Simply Wealth on www.webtalkradio.net. I spend a lot of time putting together each program to reflect what is happening week by week and provide information and education that you can use. All you need is 30 minutes and a computer with speakers to listen any time of the day or night.
I’m also always looking for topics which are important to you, so send me an email if you have something you’d like me to discuss or even a guest you’d like to hear interviewed.
Have a terrific holiday and I’ll be in touch again soon.
Paula Straub
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Wednesday, November 26, 2008
Monday, July 07, 2008
Making the Tax Bill More Bearable When Selling A Business - Option 2
So, you’re selling your business and have received the shock from your CPA of how much of the proceeds will be passing directly to Uncle Sam if you don’t implement a tax saving strategy prior to sale.
Depending on the type of business you are selling and where it is located, this amount could be between 15-50% and is usually on the higher end of that range.
In the last article, the Self Directed Installment Sale was outlined and now another option will be presented. There are so many variables involved with each sale, there is never any one size fits all “best” option. It is important to work with someone familiar with all options available, so each can be compared and considered for your unique circumstance.
If you have the need for an immediate tax deduction, perhaps to offset other gains or simply in exchange for contributing to a non-profit close to your heart, consider a Charitable Installment Bargain Sale (CIBS). Don’t confuse this with a Charitable Remainder Trust (CRT) because you are not pledging the asset to charity on your death.
In essence, you notify a participating non-profit 501(c)3 corporation that you will do a CIBS and find a buyer for your business. You negotiate the sales price using a fair market value. You donate a percentage of the FMV to the charity and they buy the asset from you at a discount and sell to your buyer in a simultaneous close for the agreed upon price.
You receive a tax deduction for the amount donated and partial tax forgiveness on the allocated tax percentage for that donation. The remainder of the proceeds is returned to you over time with interest via an installment contract between you and the non-profit.
You have the advantage of paying the taxes as you receive the payments and have the compounded tax benefit of the money that would have gone directly to pay taxes earning interest for you over many years. You determine when the payments start and how long they will last.
There is a non-profit corporation set up to handle this for you, and the program is flexible enough to be offered through any established 501(c)3 that would like to become involved and receive the donation. There is a bonded and insured independent 3rd party administrator tasked to make the payments, invest the funds and send out the necessary tax documents so the non-profit does not have to have a department set up in house.
As with the Self Directed Installment Sale, if you pass away before receiving all the agreed payments, the remainder passes to your designated beneficiaries. The costs to set up the CIBS are very reasonable, as the non-profit absorbs the legal fees for the bargain sale.
To summarize, the benefits are tax deduction, partial tax forgiveness, tax deferral and the ability to transfer some of those tax dollars to a very worth cause.
For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.
Depending on the type of business you are selling and where it is located, this amount could be between 15-50% and is usually on the higher end of that range.
In the last article, the Self Directed Installment Sale was outlined and now another option will be presented. There are so many variables involved with each sale, there is never any one size fits all “best” option. It is important to work with someone familiar with all options available, so each can be compared and considered for your unique circumstance.
If you have the need for an immediate tax deduction, perhaps to offset other gains or simply in exchange for contributing to a non-profit close to your heart, consider a Charitable Installment Bargain Sale (CIBS). Don’t confuse this with a Charitable Remainder Trust (CRT) because you are not pledging the asset to charity on your death.
In essence, you notify a participating non-profit 501(c)3 corporation that you will do a CIBS and find a buyer for your business. You negotiate the sales price using a fair market value. You donate a percentage of the FMV to the charity and they buy the asset from you at a discount and sell to your buyer in a simultaneous close for the agreed upon price.
You receive a tax deduction for the amount donated and partial tax forgiveness on the allocated tax percentage for that donation. The remainder of the proceeds is returned to you over time with interest via an installment contract between you and the non-profit.
You have the advantage of paying the taxes as you receive the payments and have the compounded tax benefit of the money that would have gone directly to pay taxes earning interest for you over many years. You determine when the payments start and how long they will last.
There is a non-profit corporation set up to handle this for you, and the program is flexible enough to be offered through any established 501(c)3 that would like to become involved and receive the donation. There is a bonded and insured independent 3rd party administrator tasked to make the payments, invest the funds and send out the necessary tax documents so the non-profit does not have to have a department set up in house.
As with the Self Directed Installment Sale, if you pass away before receiving all the agreed payments, the remainder passes to your designated beneficiaries. The costs to set up the CIBS are very reasonable, as the non-profit absorbs the legal fees for the bargain sale.
To summarize, the benefits are tax deduction, partial tax forgiveness, tax deferral and the ability to transfer some of those tax dollars to a very worth cause.
For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.
Wednesday, July 02, 2008
Making the Tax Bill More Bearable When Selling a Business - Option 1
Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You don’t want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.
Planning is everything. For this article I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. It’s pretty rare to see this, but it can defer all of your capital gains tax if done correctly.
Depending on how the business is sold, the gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.
One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.
The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.
You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.
If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.
Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.
For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.
Planning is everything. For this article I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. It’s pretty rare to see this, but it can defer all of your capital gains tax if done correctly.
Depending on how the business is sold, the gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.
One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.
The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.
You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.
If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.
Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.
For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.
Thursday, June 26, 2008
How To Get the Greatest Return on the Sale of Your Business
If you are thinking about selling, or already have your business up for sale, you don’t want to make any crucial mistakes that will cost you big time.
Most business owners only sell one business in their lifetime. The results of this sale have a major impact on the financial future of the family. You may be an expert in business development, but totally in the dark about most aspects of the best way to sell.
A colleague of mine, Dave Kauppi makes his living helping business owners get the maximum return from their business sales. He has extensive knowledge of the mistakes made by owners attempting to handle the sales process without professional help and can make sure your business is not a victim of unintended financial disaster.
Dave publishes the Exit Strategist Newsletter. It contains a wealth of useful advice to help guide you through your business sale. The subscription is complimentary and I urge you to sign up on his website.
Go to www.midmarkcap.com/exit and start learning how to reduce taxes, put together creative deal structures, perform valuations, employ buyer negotiation tactics and much more.
You owe it to yourself to learn how to structure your business sale to your own advantage and have a place to turn when you need some help. Wouldn’t you rather learn from the mistakes of other business sellers instead of being the one to suffer the consequences?
You can also reach Dave directly by calling 630-325-0123 or emailing him at davekauppi@midmarkcap.com .
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
Most business owners only sell one business in their lifetime. The results of this sale have a major impact on the financial future of the family. You may be an expert in business development, but totally in the dark about most aspects of the best way to sell.
A colleague of mine, Dave Kauppi makes his living helping business owners get the maximum return from their business sales. He has extensive knowledge of the mistakes made by owners attempting to handle the sales process without professional help and can make sure your business is not a victim of unintended financial disaster.
Dave publishes the Exit Strategist Newsletter. It contains a wealth of useful advice to help guide you through your business sale. The subscription is complimentary and I urge you to sign up on his website.
Go to www.midmarkcap.com/exit and start learning how to reduce taxes, put together creative deal structures, perform valuations, employ buyer negotiation tactics and much more.
You owe it to yourself to learn how to structure your business sale to your own advantage and have a place to turn when you need some help. Wouldn’t you rather learn from the mistakes of other business sellers instead of being the one to suffer the consequences?
You can also reach Dave directly by calling 630-325-0123 or emailing him at davekauppi@midmarkcap.com .
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
Wednesday, June 04, 2008
Selling Your Second or Vacation Home
Almost everyone is affected by something happening within the economy today.
Housing prices have taken a dive. Staples such as food and gas are significantly more expensive and still rising. Jobs are being cut throughout many sectors such as construction, education, retail, restaurant, manufacturing, etc. So, the first thing we find ourselves doing is looking to see what we can do without.
I’ve been receiving a lot of calls and emails regarding the sale of second or vacation homes. Once a nice luxury and place to retreat, they are more and more becoming a financial strain, or at least an unnecessary part of life for many.
When selling a vacation or second home, you can’t enjoy the personal exclusion given to primary residences, nor can you qualify for a 1031 exchange available for investment property. Thus, saving on taxes becomes an even more important issue.
If you need to maximize your income, a Self Directed Installment Sale could be an excellent choice. It will basically allow you to receive a steady income stream over the number of years you choose. It also allows for the capital gains tax to be paid back over many years, and compounds the amount of return using the tax amount that would have been paid upfront to earn interest for you going forward.
So, by selling your vacation home and deferring taxes, you have immediate relief from the ongoing expenses of a second property, and additional monthly income to cover the rising costs of life.
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
Housing prices have taken a dive. Staples such as food and gas are significantly more expensive and still rising. Jobs are being cut throughout many sectors such as construction, education, retail, restaurant, manufacturing, etc. So, the first thing we find ourselves doing is looking to see what we can do without.
I’ve been receiving a lot of calls and emails regarding the sale of second or vacation homes. Once a nice luxury and place to retreat, they are more and more becoming a financial strain, or at least an unnecessary part of life for many.
When selling a vacation or second home, you can’t enjoy the personal exclusion given to primary residences, nor can you qualify for a 1031 exchange available for investment property. Thus, saving on taxes becomes an even more important issue.
If you need to maximize your income, a Self Directed Installment Sale could be an excellent choice. It will basically allow you to receive a steady income stream over the number of years you choose. It also allows for the capital gains tax to be paid back over many years, and compounds the amount of return using the tax amount that would have been paid upfront to earn interest for you going forward.
So, by selling your vacation home and deferring taxes, you have immediate relief from the ongoing expenses of a second property, and additional monthly income to cover the rising costs of life.
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
Wednesday, May 14, 2008
Exciting New Concept in Capital Gains Tax Planning
I'm very excited about a project I have been working on for quite a while that is coming to fruition. I hope to have it available by the beginning of June.
It is a twist on the Charitable Installment Bargain Sale and I hope having this option will be appealing to a lot of people who want to make the world a better place for a deserving group of people.
I've been listening to clients over the last year and one half tell me what they liked and didn't like about the current foundation offering this product.
The three most common hesitations were dealing with a new and untested foundation, not being able to choose to send a part of the donation to their favorite charity, and wondering if the large tax deduction would hold up under IRS scrutiny.
Well, the new program I am helping to launch addresses all of those concerns and will help a cause almost every American will want to contribute to if it fits their overall objectives in selling their asset.
I know this is a tease, but I am very proud of what this will mean to a lot of deserving people.
Stay tuned for upcoming announcements.
Paula Straub
760-917-0858
Save Gains Tax
It is a twist on the Charitable Installment Bargain Sale and I hope having this option will be appealing to a lot of people who want to make the world a better place for a deserving group of people.
I've been listening to clients over the last year and one half tell me what they liked and didn't like about the current foundation offering this product.
The three most common hesitations were dealing with a new and untested foundation, not being able to choose to send a part of the donation to their favorite charity, and wondering if the large tax deduction would hold up under IRS scrutiny.
Well, the new program I am helping to launch addresses all of those concerns and will help a cause almost every American will want to contribute to if it fits their overall objectives in selling their asset.
I know this is a tease, but I am very proud of what this will mean to a lot of deserving people.
Stay tuned for upcoming announcements.
Paula Straub
760-917-0858
Save Gains Tax
Monday, April 28, 2008
Tax Time is Over - It's Not Too Late To Plan for Next Year
The last few weeks before taxes are due I field a lot of calls from desperate tax payers who sold an asset in the past tax year and now are faced with writing a huge lump sum check to the IRS.
Most knew it was coming, but were not prepared for the amount their accountant just presented them with. It is often double or triple what they expected to pay. Some have no idea where the money will come from because they either spent the proceeds or re-invested into another asset.
The worst news is that it is too late to do anything about it. The event took place in a previous tax calendar year, the proceeds were dispersed and no tax strategy was in place prior to their sale or at least prior to December 31.
This same scenario takes place each and every year and the outcome doesn’t change. The time to start searching for ways to pay less in taxes is before the sale and not months after it has been completed. Human nature is to put things off until the absolute last minute of a deadline and then scramble around in panic to try and salvage a disaster in the making.
The other trend is to find out what options are available and then not take action because it takes too much effort to understand the process and the benefits. It is similar to hiring a Financial Planner to outline a series of steps to start investing for your retirement and then ignoring the plan completely because it’s easier to just spend your whole paycheck rather than putting money aside for your future benefit.
The big picture is often the hardest to comprehend. You may have to feel you are sacrificing a bit now (spreading out the receipt of your gain) versus collecting it all in a lump sum immediately. Instead, you need to see it as achieving a greater amount overall at the end of say 15-20 years.
If you contributed for 30 years to a pension plan at work so you could retire at age 65 would you withdraw 100% of that money the day you retired and pay taxes on all of it at once? Most likely it would never cross your mind. That money is what you will live on during your retirement years.
So why would you want to pay taxes all at once on the sale of your asset and then have to turn around and re-invest what was left over in the same type of safe vehicle that it would be going into anyway with a tax strategy only missing 15-30% of what you would have started with?
As with any investment, it’s not what you make, it’s what you get to keep.
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
Most knew it was coming, but were not prepared for the amount their accountant just presented them with. It is often double or triple what they expected to pay. Some have no idea where the money will come from because they either spent the proceeds or re-invested into another asset.
The worst news is that it is too late to do anything about it. The event took place in a previous tax calendar year, the proceeds were dispersed and no tax strategy was in place prior to their sale or at least prior to December 31.
This same scenario takes place each and every year and the outcome doesn’t change. The time to start searching for ways to pay less in taxes is before the sale and not months after it has been completed. Human nature is to put things off until the absolute last minute of a deadline and then scramble around in panic to try and salvage a disaster in the making.
The other trend is to find out what options are available and then not take action because it takes too much effort to understand the process and the benefits. It is similar to hiring a Financial Planner to outline a series of steps to start investing for your retirement and then ignoring the plan completely because it’s easier to just spend your whole paycheck rather than putting money aside for your future benefit.
The big picture is often the hardest to comprehend. You may have to feel you are sacrificing a bit now (spreading out the receipt of your gain) versus collecting it all in a lump sum immediately. Instead, you need to see it as achieving a greater amount overall at the end of say 15-20 years.
If you contributed for 30 years to a pension plan at work so you could retire at age 65 would you withdraw 100% of that money the day you retired and pay taxes on all of it at once? Most likely it would never cross your mind. That money is what you will live on during your retirement years.
So why would you want to pay taxes all at once on the sale of your asset and then have to turn around and re-invest what was left over in the same type of safe vehicle that it would be going into anyway with a tax strategy only missing 15-30% of what you would have started with?
As with any investment, it’s not what you make, it’s what you get to keep.
Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html
Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net
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