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Making the Tax Bill More Bearable When Selling A Business - Option 2
2008-07-07 23:38:00
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 ...
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Making the Tax Bill More Bearable When Selling a Business - Option 1
2008-07-02 19:06:00
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 ma...
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How To Get the Greatest Return on the Sale of Your Business
2008-06-26 17:05:00
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 learn...
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Selling Your Second or Vacation Home
2008-06-04 18:28:00
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 ...
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Exciting New Concept in Capital Gains Tax Planning
2008-05-15 03:51:00
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 pr...
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Tax Time is Over - It's Not Too Late To Plan for Next Year
2008-04-29 01:48:00
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...
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The Risk of Owning Securities
2008-04-11 01:39:00
Anyone that has been through a stock market downturn is familiar with the risks of owning stocks, mutual funds, unit investment trusts, Real Estate Investment Trusts, etc.When values are rising, we pat ourselves or our advisors on the back and congratulate ourselves for making a wise pick. We may even buy more.The true test of an investor comes when the market heads downwards. Then we second guess ourselves and/or our advisor and wonder if we made a big mistake.Sometimes, some event out of our control happens and that company we thought was as solid as a rock crumbles out of the blue (Think Bear Stearns, Enron, WorldCom, Tyco, etc.)Maybe we panic and sell at a loss. Then we curse ourselves for not acting sooner. Hindsight is indeed 20/20.Any seasoned investor knows that the stock markets go through cycles just like real estate and bonds. One should be in it for the long haul or be prepared to ride a roller coaster.You might think bonds can never lose value. This is not true.It depen...
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The Risk of Owning Annuities
2008-03-20 02:12:00
I?m not sure what you know about annuities, but I will tell you that a lot of insurance agents and registered representatives don?t know as much about the products they sell as they should.You might wonder how that can be, but if you truly knew the number of annuity products currently being offered by hundreds of companies it wouldn?t be hard to fathom.The other thing that makes annuities rather intimidating is that since each company?s products have different features and crediting methods they can rarely be compared side by side with much consistency.The popularity of one over another can actually be the strength of the company offering it and how effectively they market it. Some companies set themselves apart by being truly innovative and others simply get a product out there to have something to offer along with other products.Some agents are very knowledgeable and know their products inside out. They keep up on changes and take advantage of training seminars and company experts...
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The Risk of Owning Real Estate
2008-03-20 00:20:00
Real Estate is an important part of anyone?s investment portfolio.Whether it is the house you reside in, a rental property, vacant land, or a commercial building, a good piece of real estate will almost always increase in value over time.That said, a number of factors can happen which can affect how much your property increases in value.Any time you buy a property that is less than desirable, you can lose money. Structural issues you may not be aware of, property in a declining neighborhood, land in a flood zone, natural disasters such as fire, flood, hurricane, earthquake, zoning issues, tax issues, insurance issues, all play a part in the value and profitability of the property.Economic issues can also have a great effect and are much harder to predict and knowingly avoid.In 2008 times are tough. People are losing homes and jobs, property values are dropping, companies are going out of business or are seeing major declines in revenue, and a property may not sell as quickly as you?...
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No Such Thing as No Risk
2008-03-20 00:13:00
We all would like guarantees that any investment we make will never lose money or value. The reality is that every investment has a certain amount of risk.Whether you are purchasing real estate, stocks, bonds, mutual funds, annuities, gold, or even certificates of deposit there is risk.The best you can do is evaluate what it is you are purchasing, be aware of the specific risks and potential rewards that asset has associated with it, know what if any recourse is available should something unexpected arise, and do not put all your eggs in the same basket.We all know the stock market goes up more than it goes down over extended periods of time. Buying good quality stocks of a diversified nature and holding them through both down and up cycles will almost always show long term profit.Real Estate has similar cycles. If you purchase a good quality property in good condition in a good area it will most likely increase in value over time.The comparative safety of a certificate of deposit h...
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Life Settlements and Capital Gains
2008-03-05 21:22:00
Do you meet the following criteria?*Age 65 or older*Have a Life Insurance Policy with a face amount of 250K or more*There has been a change in insurability since the policy was issued*Life expectancy of 15 years or lessIf so, a life settlement may be something to consider. A life settlement is the sale of a life insurance policy for more than the surrender value while living.Here are some circumstances that may lend themselves to a life settlement.*You have a policy that is underperforming and you can no longer afford the premiums to keep it in force.*You had the policy to protect a spouse who has passed away.*You have a key employee life policy and that employee no longer is in your employ.*You have the ability to replace this policy for a policy with the same death benefit and lower premiums.*The policy was to cover estate tax which is no longer an issue.*You are considering surrendering the policy or letting a convertible term policy lapse for any reason.Before you let a policy l...
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Having Trouble Selling Your Property? How About Auction?
2008-03-05 00:39:00
The biggest thing affecting my clients over the last year or so is that real estate is simply not selling the way it used to.I can?t even count the number of times that a sale is all wrapped up after months of waiting, and at the last minute it falls out of escrow.Most times it is due to the financing of the buyer not coming through as planned. In today?s market even ?preapprovals? don?t seem to hold a lot of weight.So although the buyer may lose a deposit, the sale doesn?t happen and the property goes back on the market. It may sit there for any number of months and sometimes the seller is forced to rent it out again just to keep afloat.If your property is just sitting there with no bites, or you need to sell it sooner rather than later, you might consider putting it up for sale through auction.I recently devoted a weekly radio show to this topic, and if the idea appeals to you take a listen.An archive of all of the episodes of ?Simply Wealth? is now available on the following webs...
More About: Selling , Property , Auction

When Is a Year and a Day not a Long Term Gain?
2008-02-29 22:54:00
I read an interesting article today and had to share.It?s one of those quirky things that you would probably not ever think about until you got caught in a really awful situation.By now you know that long term capital gain is taxed at a lower rate than ordinary income, so if you hold an asset for longer than one year you receive a tax advantage when you sell.You actually must hold the asset for at least a year and a day to qualify. So, something purchased on March 10 of one year could be sold on March 11 of the following tax year and receive long term capital gains treatment.So when does this rule of thumb not apply? Leap year, of course.If you buy shares on February 28 in a year preceding a leap year, and sell them on the following February 29, your gain or loss is short-term, not long-term.This surprising outcome is the result of a technicality. Your holding period for an asset is deemed to begin on the day after the date of purchase. That's why you can't get a long-term gain wh...
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What About Investing in Real Estate Outside of the US?
2008-02-15 22:08:00
The US market is pretty shaky right now in real estate. So, what about investing outside the USA?It may be worth looking into once you know how to do your due diligence and ask the right questions.This is the topic of the week for my radio show "Simply Wealth". My guests are two experienced overseas investors, Mynette Boykin and Glen Fulton.The are currently investing in Peru, Mexico, and Viet Nam amongst other countries where the markets are hot.You can listen over the web at http://www.webtalkradio.net . Click on my name or the show Simply Wealth. You can also download it to your IPOD or mp3 player and take it with you on the road.Paula Straub760-917-0858savegainstax@gmail.comw ww.savegainstax.comSubscribe in a reader
More About: Estate , Real Estate , Investing , Real

The Dish on Finding the Right CPA
2008-02-05 18:29:00
This week's guest on my radio show "Simply Wealth" is Diane Kennedy of http://www.taxloopholes.com/.Diane is a very well known CPA and tax strategist and author of several books and courses.An ongoing challenge for a lot of my capital gains clients is finding the right CPA. Even with a tax strategy for a particular asset sale, it is important to know how all the different taxes you may be subject to can affect your bottom line.Diane uses a statistic from a study that 80% of CPAs don't understand actual tax planning. It is not their focus. Once you own a business or real estate investment, it is very important to have it structured properly and take advantage of all the deductions you are allowed.It is important to have someone who understands that keeping as much money working for you as possible for as long as possible will increase your wealth.Never assume because someone took a CPA exam (perhaps many years ago) that they are aware of current rules on more complex tax subjects. ...
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Simply Wealth Radio Program Debuts Today
2008-01-21 23:42:00
My radio program "Simply Wealth " is debuting today, January 21, 2008.If you have a computer with speakers and an internet connection you can access it by going to http://www.webtalkradio.net and either clicking on "Simply Wealth" from the schedule page or going to hosts, and Paula Straub, and clicking on the link there.My first guest is Monte Lee-Wen of the PPA Group and InvestorTours.com and the subject is whether commercial real estate is suffering the same rocky road as residential properties.The show is also available in podcast form, so if you have an MP3 player, you can download to it and listen while on the road or at your leisure from anywhere.Be sure to check it out. Next week I talk with guest Jack Guttentag about the mortgage meltdown and what to do if you need a loan or are in one that you can no longer afford.Paula Straub760-917-0858www.savegainstax.comSub scribe in a reader
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Your Input Would Be Appreciated
2008-01-09 21:36:00
I have been asked to host a new weekly talk radio show which will be debuting January 21, 2008 on www.webtalkradio.net.It will be called ?Simply Wealth? and will be available on-demand from the website, in podcast form, and soon at many national public libraries in subscription form.I?m very excited and can use your help to make it the best radio program online.The show will be focusing on timely topics which will educate and inform listeners on ways to increase, maintain, protect and pass on their personal wealth.Each week I will interview guests who are experts in their respective fields and I would love you to write and tell me what subjects you would like more information on and that would personally benefit you.As my subscribers, your needs are very important to me.Currently, shows will include managing the mortgage meltdown, how commercial real estate is holding up compared to residential, selling your home through auction, how to choose the right CPA, Long Term care for famil...
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AMT fix for 2007 Finally Here
2007-12-21 01:59:00
Well, the powers that be have decided to give the AMT (Alternative Minimum Tax) a band aid again this year.There was a lot of dissension amongst Republicans and Democrats on how to save about 20million people from being hit with an average of 2K of extra taxes this year.The republicans wanted to raise the income ceiling without adding a new tax somewhere else, and the democrats wanted to make sure the loss was paid for with a tax increase in another area to offset it.The republicans won this round, as time was critical and the dems didn't have enough votes to veto it.So, will you escape the AMT? It really depends. If you are married and make less than 66K as a couple you may. If you have a large capital gain for 2007, you may not be so lucky as this may trigger it for your tax return.There's not much time left to do anything about it, so make sure you run some calculations to see if you will owe extra tax this year.Oh, yeah. The IRS now has to scramble to correct the forms for 200...
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Blogging tools
2007-12-21 01:41:00
I'm evaluating a multi-media course on blogging from the folks at Simpleology. For a while, they're letting you snag it for free if you post about it on your blog.It covers:The best blogging techniques.How to get traffic to your blog.How to turn your blog into money.I'll let you know what I think once I've had a chance to check it out. Meanwhile, go grab yours while it's still free.Subscribe in a reader
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Taking the Long Term View
2007-12-11 01:08:00
As I?ve said many times before, there isn?t anyone who is selling an appreciated asset who doesn?t want full liquidity, full control, high interest guarantees and no tax obligation whatsoever. This is not an option unless you want the wrath of the IRS upon you. So, the best option is to use the current tax laws to full advantage and give up some of the above to receive some savings in return.Unless you are doing a 1031 exchange which can defer all taxes, to save on capital gains you need to resolve yourself to take payments in one of the other strategies over time.If you take it all at once, you pay taxes all at once. Period.Receiving a payment stream is really a good thing in most cases. Especially for anyone approaching or already in retirement.There is a reason why you don?t receive your company pension or your social security in a lump sum. Most people would go through the entire amount long before their lives were over and would have nothing to live on. Just check the statistic...
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Case Study for Lump Sum Distribution Tax Reduction
2007-12-04 23:08:00
Ask anyone in the tax business and they will tell you the worst way to be taxed is as ordinary income. This is because (with the possible exception of some corporate rates) you will pay tax at the highest rates in effect.I?ve had several clients receive large sums of compensation in 2007. The reasons range from a pension or deferred compensation lump sum payout that was unavoidable, to a large lump sum that resulted from a business sale payout package.Once income is received there is no way to defer the tax due. However, there may very well be a way to minimize it. Let?s look at a real life example.Client Mark received a lump sum income distribution of 1 million dollars in 2007 from a business sale. He was going to owe close to 45% in income tax, or 450K. That would have left him with only 550K to retire on.Since the taxable event had already occurred, his only option was to try and reduce the 450K tax bill.This was accomplished with a Charitable Installment Bargain Sale. The idea ...
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Upcoming Appearance on the Daily Bear Radio Show 11/27/07
2007-11-27 01:37:00
Just wanted to let you know I will be appearing live on the radio on ?The Daily Bear Show ? on Money Matters Radio Network on Tuesday, November 27, 2007 at 8:20a.m PST/11:20am EST.I?ll be discussing with host Lou Michaels how to maximize your retirement savings with capital gains tax strategies.You can listen live on the internet with streaming audio athttp://www.moneymattersradio.net/Hope you get a chance to tune in!Paula Straubwww.savegainstax.comsavegainstax@gm ail.com760-917-0858Fill out a Qualification Questionnaire and see if you qualify to save capital gains tax. Go tohttp://www.savegainstax.com/qq.htmlFind the ?Definitive Beginner?s Guide to Potentially Saving Hundreds of Thousands of Dollars in Capital Gains Tax? athttp://www.savegainstax.com/sales.phpSu bscribe in a reader
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Those in These Categories Need to Take Action by Year?s End
2007-11-05 21:47:00
Does this sound like your situation?It?s already November and the end of the tax year is approaching quickly. If you are in any of the following situations, you need to act now or it will be too late to lower your tax obligation for 2007.* You sold an asset in 2007 tax year with capital gain of over 100K and did not have a tax saving strategy in place prior to sale.* You are getting a large lump sum of compensation by December 31st which will put you into a high tax bracket and you will be sending 33%-50% to the IRS in the form of income tax.* The sale of your asset will occur on or before December 31, 2007 and you will have a capital gain of over 100K.Depending on which category you fall into, your savings could range from significant to massive. In all the above cases, it is crucial you have the understanding of the consequences vs. rewards should you decide to act and protect your monies.Many people think that April is my busiest month since that is tax deadline. This is true for...
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Bottom Line ? Installment Sale Through a Foundation ? Part V
2007-10-31 20:50:00
So far, I have addressed some of the ins and outs of the 1031 exchange, the Charitable Remainder Trust, the Structured Sale , and now will do the same for the Installment Sale Through a Foundation .There is no one particular strategy that is right for everyone, and it behooves you to work with someone who can review your whole financial picture and needs so that you can compare and contrast all of your options and find the right one or ones for you.The Installment sale through a foundation works with pretty much all highly appreciated assets. Currently, there is only one foundation set up to handle this transaction though I predict more will follow suit over time. This strategy had been in the works for over a year to handle the disposition of C-Corps, but was put into full swing in January 2007 following the removal of the Private Annuity Trust for tax deferral by the IRS in October 2006.A Charitable Bargain Sale is performed by a 501C3 Charitable Foundation and the asset is purchase...
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Wildfire Aftermath
2007-10-31 19:52:00
I just want to take a moment to thank everyone who sent their good thoughts my way during the recent fires here in San Diego. It worked because my home was spared despite spending three days with my bags packed and on standby evacuation status.Many others weren?t as fortunate and are faced with the inordinate task of getting their lives back on track after losing everything they own.A tragedy such as what happened throughout Southern California will have some far reaching impacts that most don?t think about.Those who lost businesses no longer have a source of income but may still have outstanding business expenses to deal with. Those who lost homes with mortgages still have those payments to make as well as the cost of alternative living arrangements.Those with properties for sale in affected neighborhoods will no doubt be forced to reduce asking prices or hang onto them for years.Many will face foreclosure or bankruptcy. Insurance often does not cover all the expenses which arrive ...
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The IRS Giveth, and the IRS Taketh Away
2007-10-25 23:57:00
If you haven?t noticed a pattern yet, when tax law changes to benefit one segment of the population (resulting in a loss of revenue to the IRS), there is usually some other change that reduces benefits to a different population segment, thus making up for the former loss.Such is exactly what will happen if pending legislation passes into law.HR 3648, or the Mortgage Cancellation Tax Relief Act, passed the House of Representatives Oct. 4, 2007 and is up for consideration in the Senate. If the bill becomes law, its tighter restrictions may require a new strategy for some investors.Here is the gist in laymen?s terms of what this might mean to the average investor.If you are in danger of foreclosure on your existing mortgage, a buyer may make a deal with your lender to purchase your home for less than what you owe. You are ?forgiven? the difference from the lender, but under current tax law you must declare this forgiven amount as income on your tax return and pay income tax on money yo...

Bottom Line - Structured Sales - Part IV
2007-10-16 22:32:00
This is the fourth part in a series designed to give some food for thought when considering different tax saving strategies.When utilizing a structured sale, there are several different parties involved. The company handling the proceeds from the sale and effectively making payments back to you over time is the ?Assignment Company?.Your buyer actually never revokes his obligation to make the payments to you, but assigns this obligation to the assignment company. There is not a whole lot of risk in doing this the way it is set up, but some buyers may not be on board with the concept.The assignment companies currently offering the structured sales are located offshore in Barbados. There are many favorable tax breaks for offshore companies, but should the need arise to ever enter into a legal action with an offshore company, it is a bit more complicated than if the company were in the USA. They are subject to different tax laws and it is a bit more involved to litigate outside the US....
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Bottom Line - The Charitable Remainder Trust (or any Irrevocable Trust) Par
2007-10-10 01:13:00
The Char itable Remainder Trust has been around for quite a while as well. It comes in many different forms that have acronyms like CRT, CRUT, CRAT, NIMCRUT, CGA. There are a couple of capital gains tax strategies that also involve non-charitable irrevocable trusts.The differences are too complex to go into detail in this article, but the gist is that you pledge all or part of an asset to a charity either immediately or at your death for benefits like a tax deduction, tax forgiveness and an income stream while living. For the non-charitable trusts, you basically give up control of your asset for a series of installment payments and pay taxes as you receive principle.The IRS allows you favorable tax treatment if you pledge to a charity and exchange control of your asset for a series of interest payments. Here are some considerations when contemplating an irrevocable trust.Who will own the trust? The Charity or (if a non-charitable trust) Related and/or Unrelated parties? What happens ...
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A Good Problem to Have
2007-10-09 02:56:00
It is true, the more money you have, the more options you have. That?s all good, and evidenced by a recent situation I encountered.A man and his wife in their mid-fifties were receiving their portion of family real estate holdings in an upcoming sale. Their portion of the gain was 4.5 million dollars. They live in California, and there was depreciation recapture involved, so their tax obligation was over 1.3 million dollars if they sold outright and paid their tax bill.We discussed many options and there was no bad plan. Most of us would be thrilled to have the choices they did. This was not their only asset or source of income. Even if they paid their taxes it would not have affected their current or future life style.What they decided to do was a bit surprising, but given their situation, it worked for them.They chose to do a 1031 exchange, but their choice of exchange property was a 4.5 Million dollar single family home that they eventually want to make their primary residence.Th...
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The Cost of a 1031 Exchange
2007-10-01 19:04:00
To do a 1031 exchange, you must file paperwork with a Qualified Intermediary prior to close of escrow. The QI receives the money from the sale of your relinquished property and holds it until you purchase the exchanged property. They release the funds in escrow at the close of the exchange. You must never have possession of these funds per IRS 1031 exchange rules.There are not enough regulations to govern those acting as Intermediaries. Property sellers in Idaho found out the hard way. Below is the link to the article describing how many exchangers lost their entire investment.http://www.idahostatesman.com/ localnews/story/171612.htmlThere is a way to insure your funds. It is in associating with an experienced QI who is educated, insured and bonded and also pays interest on your funds while they are being held.Fees differ even within the same state. The most expensive one is not necessarily the best. I refer my clients to a well known national firm who charges a flat $400.00 fee per ...
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