Well, another year down and what a year it was! Unfortunately, for many not such a good year financially.
Retirement accounts, savings, home values are pretty much down across the board. Layoffs are compounding and unless we can get people back to work, more will lose their homes, savings and most likely benefits such as health insurance coverage. None of this is good news and will start 2009 on a down note.
On the upside, we have a new president coming into office, and he has hopefully engaged the right brain power to begin to turn things around over the coming months.
On the upside, if you have a steady job and good credit, opportunities abound with the ability to refinance at a low rate and buy stocks and property at sale prices. If only the majority of people fit into this bracket!
So, my wishes for the coming year are job creations, a consumer confidence rebound, health care reform and not an excessive amount of tax increases. Also, less war worldwide would be a very welcome change.
So all the best for a happy, healthy, and prosperous year ahead.
Paula Straub
Wednesday, December 31, 2008
Wednesday, December 17, 2008
What Will Obama Do With Capital Gains Taxes?
Dow Jones Newswire reports that President-elect Obama's plans include:
Exempting seniors earning less than $50,000 from income tax.
Increase the top two marginal tax rates from their current levels of 33 percent and 35 percent to 36 percent and 39.6 percent, respectively. Based on 2009 income thresholds, that would result in a tax increase on singles making $171,550 or more and married couples making $208,850 or more.
Taxpayers in those brackets also face increased taxes because President-elect Obama plans to restore phase-outs of personal exemptions and itemized deductions. This means that high-earners would not only face higher tax rates, but they would also lose some or all of their personal exemptions and itemized deductions.
Obama has also proposed raising the tax rate on capital gains income from 15 percent to 20 percent for single taxpayers making more than $200,000 and for married couples earning more than $250,000 annually.
Of course, nothing is set in stone yet and some of these issues may not be addressed until well into his term, depending on the economy.
We can be sure, however, that at some point the government will have to be paid back for all the billions or trillions of dollars it is spending to stabilize our financial infrastructure.
This will most likely be done through tax increases, so minimizing taxes becomes more important than ever. I’m glad my practice will benefit throughout the foreseeable future!
Paula Straub
http://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 http://www.webtalkradio.net/
Exempting seniors earning less than $50,000 from income tax.
Increase the top two marginal tax rates from their current levels of 33 percent and 35 percent to 36 percent and 39.6 percent, respectively. Based on 2009 income thresholds, that would result in a tax increase on singles making $171,550 or more and married couples making $208,850 or more.
Taxpayers in those brackets also face increased taxes because President-elect Obama plans to restore phase-outs of personal exemptions and itemized deductions. This means that high-earners would not only face higher tax rates, but they would also lose some or all of their personal exemptions and itemized deductions.
Obama has also proposed raising the tax rate on capital gains income from 15 percent to 20 percent for single taxpayers making more than $200,000 and for married couples earning more than $250,000 annually.
Of course, nothing is set in stone yet and some of these issues may not be addressed until well into his term, depending on the economy.
We can be sure, however, that at some point the government will have to be paid back for all the billions or trillions of dollars it is spending to stabilize our financial infrastructure.
This will most likely be done through tax increases, so minimizing taxes becomes more important than ever. I’m glad my practice will benefit throughout the foreseeable future!
Paula Straub
http://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 http://www.webtalkradio.net/
Friday, December 12, 2008
If It Sound Too Good To Be True...
If it sounds too good to be true… yep, it usually is.
You’ve heard this saying time and time again, but it is not always easy to know when you are simply following existing guidelines to save money and grow your profits, or when you are tempted to “go for the bleachers” and fall prey to a party who promises you the moon but delivers nothing but heartache. I always go by the motto that it is better to under promise and over deliver than vice versa.
Even wealthy investors are easily misled when dealing with the mask of seemingly successful individuals whose motives often come down to personal greed and arrogance but initially appear to offer a brass ring.
I’m not sure any of us saw the downfall coming of major banks, investment firms and large corporations. It seems even their leadership was mislead into believing some of these complicated investment vehicles were safe and prudent.
However, there are many red flags to look out for that have held true for years. Here are just a few at the top of my list.
* Don’t get fooled by someone wearing a 4K suit and driving a Rolls Royce. Give me a guy like Warren Buffet any day. Even though he’s one of the wealthiest men in the world, he lives in the same house he bought 27 years ago and drives a modest car. I find many people who flaunt wealth come into it at the expense of others they have taken advantage of. They are the only ones that get richer until they get caught doing something illegal or immoral.
* If history shows the average investment return in a vehicle such as stocks or mutual funds is 7 or 8 percent on average over time and someone tells you they consistently get 12 or 15 or 20 percent annually even through bad times, make sure they are able to explain exactly how this is being done. It may be possible, but chances are they are luring you in with empty promises and you only find out once you have lost money that these claims were untrue or exaggerated.
*If someone tells you they are letting you in on an investment typically only available to a very select group – beware. I have seen even an educated man fall victim to this sort of desire to “play with the big boys”. There is often a cloak of secrecy surrounding the details that can’t be disclosed due to “protecting the sources” who deal only with the well healed. It’s usually a scam.
* Legitimate companies value transparency and disclosure. They have nothing to hide and are willing to “show you where the money is” at all times. I don’t like companies that tell you their investments or structures are all proprietary and unique only to them so they aren’t able to disclose the details unless you give them money first.
* Know that any unregulated investments are just that. They can set their own rules and are buyer-beware. This is why hedge funds and the like take huge risks and can either sky rocket or go belly up in a very short time.
In this world where governors try to sell Senate seats, former NASDAQ chairmen run Ponzi schemes, company execs pay themselves huge salaries while their companies and stock holders go broke, and politicians fall to scandal, it makes sense to stick to the basics.
This doesn’t mean burying your money in the backyard or not doing everything you can to maximize what you do have, but don’t jump at a chance to gamble on hitting a home run when taking one base hit at a time will usually win the game and allow you to sleep at night.
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
Tuesday, December 02, 2008
Year End Tax Planning
December always brings its share of stresses along with the enjoyment of the holiday season. This year has not been a banner year for many families so the holidays may not be as much fun as in previous years.
Year end also deserves a close look for tax planning. Even though taxes are due in April, whatever balancing doesn’t get done in December sets the tax consequences for the previous year.
Here are just a few things to consider:
If you had gains should you look to sell assets at a loss to minimize the taxes? If it is stocks, you can always buy the loser shares back after 30 days if you feel they will go up in value again soon.
If you had losses, should you look to sell something you’ve been putting off at a gain? This year watch for exceptions to withdrawal from retirement accounts that may pass Congress at the last minute.
If you had gains, can you add extra to existing retirement accounts or open new ones to reduce your income?
If you are planning to gift children or grandchildren make sure you take advantage of the 12K yearly exemption per person to the gift tax limits.
Be aware if you own mutual funds outside of a retirement account that you may get a distribution which is taxable even if you still own the funds. Be sure you have the extra money to pay the tax bill.
If you are a business owner with extra income consider purchasing equipment which can be depreciated at an accelerated rate.
If you are self employed, consider deferring income into the next tax year if possible.
High income earners, watch out for the AMT tax trap. Have a tax professional do a quick computation to see if this will catch you before it’s too late to do something about it.
I know this may not be at the top of your list for fun things to do, but it’s better to spend some time now than be surprised in April when it’s too late.
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
Year end also deserves a close look for tax planning. Even though taxes are due in April, whatever balancing doesn’t get done in December sets the tax consequences for the previous year.
Here are just a few things to consider:
If you had gains should you look to sell assets at a loss to minimize the taxes? If it is stocks, you can always buy the loser shares back after 30 days if you feel they will go up in value again soon.
If you had losses, should you look to sell something you’ve been putting off at a gain? This year watch for exceptions to withdrawal from retirement accounts that may pass Congress at the last minute.
If you had gains, can you add extra to existing retirement accounts or open new ones to reduce your income?
If you are planning to gift children or grandchildren make sure you take advantage of the 12K yearly exemption per person to the gift tax limits.
Be aware if you own mutual funds outside of a retirement account that you may get a distribution which is taxable even if you still own the funds. Be sure you have the extra money to pay the tax bill.
If you are a business owner with extra income consider purchasing equipment which can be depreciated at an accelerated rate.
If you are self employed, consider deferring income into the next tax year if possible.
High income earners, watch out for the AMT tax trap. Have a tax professional do a quick computation to see if this will catch you before it’s too late to do something about it.
I know this may not be at the top of your list for fun things to do, but it’s better to spend some time now than be surprised in April when it’s too late.
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, November 26, 2008
Thanksgiving Wishes
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
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
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.
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