TAX ANALYSIS REQUEST
A Deferred Tax Strategy
TAX ANALYSIS REQUEST
DREAM IT. PLAN IT. DO IT.
DREAM IT. PLAN IT. DO IT.
DEFERRING TAX ON CAPITAL GAINS
If you have highly appreciated assets with more than $300,000 in capital gains exposure, then we may be able to help by providing you with a strategic way to engineer the assets you receive.
DEFERRING TAX ON CAPITAL GAINS
If you have highly appreciated assets with more than $300,000 in capital gains exposure, then we may be able to help by providing you with a strategic way to engineer the assets you receive.
A UNIQUE STRATEGY FOR HIGHLY APPRECIATED ASSETS
A time-tested Tax Deferred Strategy that is a legal, proven 1031 Exchange alternative, or a way to protect your 1031 Exchange from failing. The simple elegance of our deferred tax strategy applies a lawful and accepted process to allow the seller of a business to defer capital gain taxes due at the time of sale over a period of time agreed upon with the seller or taxpayer in advance. This tax strategy uses a 100-year-old tax code under IRS code 453, which is a form of installment sale paired with a specialized trust that acts as a third party, so at the time of the sale you don’t receive constructive receipt of the asset, which would be taxable by the IRS. This is not a monetized installment sale.
Ultimately, a Deferred Tax Strategy has the potential to generate substantially more wealth than a direct or taxed sale.
A UNIQUE STRATEGY FOR HIGHLY APPRECIATED ASSETS
A time-tested Tax Deferred Strategy that is a legal, proven 1031 Exchange alternative, or a way to protect your 1031 Exchange from failing. The simple elegance of our deferred tax strategy applies a lawful and accepted process to allow the seller of a business to defer capital gain taxes due at the time of sale over a period of time agreed upon with the seller or taxpayer in advance. This tax strategy uses a 100-year-old tax code under IRS code 453, which is a form of installment sale paired with a specialized trust that acts as a third party, so at the time of the sale you don’t receive constructive receipt of the asset, which would be taxable by the IRS. This is not a monetized installment sale.
Ultimately, a Deferred Tax Strategy has the potential to generate substantially more wealth than a direct or taxed sale.
READY TO ADD A TAX DEFERRED STRATEGY TO YOUR FINANCIAL PLAN?
Fill out the form below to schedule a consultation with
Matthew James Tax Pros.
READY TO ADD A TAX DEFERRED STRATEGY TO YOUR FINANCIAL PLAN?
Fill out the form below to schedule a consultation with
Matthew James Tax Pros.
Taking a look at a few hypothetical tax-saving scenarios...
NEW YORK CITY
LOS ANGELES
CHICAGO
NEW YORK CITY
CASE STUDY: COMMERCIAL PROPERTY SALE
Sales proceeds after commissions & closing costs: $20,000,000
Seller's Original Basis: $5,000,000
Capital Improvements: $1,000,000
Depreciation: $4,000,000
Mortgage Balance at time of closing: $2,000,000
Seller's adjusted basis [purchase price + capital improvements - depreciation]: $2,000,000
Taxable gain [net sales proceeds minus adjusted basis]: $18,000,000
Federal Tax
[unrecaptured section 1250 gain applies]: 20-25%
NY State & City Tax: 12.7%
Medicare Tax: 3.8%%
Approximate Tax Due: $6,770,000
Approximate Tax Due with Deferring Tax on Capital Gains: $0
LOS ANGELES
CASE STUDY: COMMERCIAL PROPERTY SALE
Sales proceeds after commissions & closing costs: $4,000,000
Seller's original basis: $400,000
Mortgage balance at time of closing: $300,000
IRC sec.121 exclusion
[$250,000 per owner residing there for two of the last five years]: $500,000
Seller's adjusted basis
[purchase price + section 121 exclusion]: $900,000
Taxable gain
[net sales proceeds minus adjusted base]: $3,100,000
Federal Tax: 20%
CA State & City Tax: 13.3%
Medicare Tax: 3.8%
Approximate Tax Due: $1,500,100
Approximate Tax Due with Deferring Tax on Capital Gains: $0
CHICAGO
CASE STUDY: COMMERCIAL PROPERTY SALE
Sales proceeds after commissions & closing costs: $10,000,000
Seller's original basis: $0
Business loan balance at time of closing: $250,000
Taxable gain
[net sales proceeds minus adjusted base]: $10,000,000
Federal Tax: 20%
IL State Tax: 4.95%
Medicare Tax [does not apply to this situation]: 3.8%
Approximate Tax Due: $2,495,00
Approximate Tax Due with Deferring Tax on Capital Gains: $62,375
As an authorized and approved wealth advisor, Matthew James Tax Pros promoted a deferred tax strategy, which uses the Deferred Sales Trust (DST). The Estate Planning Team is not responsible for recommendations made by Matthew James Tax Pros, including the Deferred Sales Trust or other tax, legal, or estate planning strategies.
Matthew James Tax Pros is an Investment Advisory practice that offers investment advisory products and services through Impact Partnership Wealth, LLC (IPW), a Registered Investment Adviser. IPW does not offer the tax strategies referenced. These tax strategies referred are not subject to investment advisor requirements. Tax strategies referenced are an outside business activity not offered through or supervised by IPW. IPW is not affiliated with the tax strategies referenced.
