Selling the Family Business? You Have Options; Each Has Tax Implications

For me, the end goal of tax planning not just how much tax savings can be gained. It is how those tax savings can be used to benefit the client in the most meaningful ways possible. A project I had recently illustrates this real value of proactive tax planning for taxpayers.

A man contacted me wanting to sell his family farm and retire. During all his years of farming he had thought the built-up equity in his farm would provide the bulk of what he would need to fund retirement. Unfortunately, that was not the case. To simplify it quite a bit, at a sale price of $2,250,000, and after the sale costs and debt he owed were paid, he would have no amount left at all on which to retire. Worse, he would have to pull more than $600,000 “out of pocket” to pay the rest of the $1.2 million in taxes he would owe. He was deeply worried.

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Warren Buffett Emphasizes Tax Deferral Above Avoidance

If someone offered you an interest-free loan to buy a house, and the offer was legitimate, you would take it. As Warren Buffet has said more than once, using active tax planning to defer taxes is exactly that: An interest-free loan from the government.

Buffett usually makes these remarks in the context of how he manages his portfolio of assets.

When he “buys” or “sells” a company, subsidiary or division, it usually involves a swap of assets or stock between the entities involved, avoiding a sale that involves the exchange of actual cash. Taxes on the appreciated value of any asset swapped would only become due when the assets acquired in the exchange are ultimately sold. As Buffett holds stocks seemingly forever (‘the best time to sell a stock is never,’ he has said), those taxes may never come due!

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Break the Homeowner Liquidity Trap with Better Tax Planning

Long-time Silicon Valley homeowners who bought homes back when there were more orchards than tech companies face a liquidity trap when they decide to sell their homes.

The dramatic rise in home values over the last 30 years has had the happy result of substantial return on the homeowner’s original investment. However, along with soaring appreciation rates comes a profit-crushing capital gains tax bill due for the year of sale the moment the sellers receive their sales proceeds.

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Taxes Are Done. How Big Was the Check You Wrote?

By Bruce Jones | May 01, 2017 | Tax Planning, tax season

 Every year the process of completing tax returns uncovers unpleasant surprises for business and investment property owners. Unexpected revenue, generally a good thing, drives up the tax bill. Or expenses were not properly documented and could not be fully deducted. Most critically, assets were sold without proper pre-planning, and taxes on the asset’s appreciation ate up half or more of the net profit!

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Thinking About a 1031 Exchange? There is a Better Tax-Deferral Option

I spoke recently with Eugene Page, President of Optimal Real Estate, Inc., a commercial real estate brokerage firm in Los Angeles.  With more than 30 years’ experience helping investors buy and sell commercial properties, he offers unique insights into how best to sell real estate.  He gave me a synopsis of the Los Angeles marketplace which could easily be true for any major U.S. coastal market.

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Selling a Business? Get an Objective Valuation First

When a business owner decides to sell a business, the first key step to take is to get an objective assessment of the current value of the business.

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My View on Tax Planning in a New Era Under President Trump

By Bruce Jones | Feb 14, 2017 | Tax Planning

My role as a tax planner is to be proactive, find for my clients missed planning opportunities, identify taxes that are wastefully being paid and pinpoint ways by which they can legitimately keep those dollars for themselves instead of surrendering them to Uncle Sam.  If, for example, you are self-employed earning $150,000 annually and file a Schedule C, you are likely overpaying in taxes at least $10,000 a year.  What can you do with an extra $10,000?

The tax code is full of opportunity to save taxes; unfortunately, most taxpayers are blind to them. They do not know about the sections in the Code that allow taxes to be eliminated, reduced or deferred. Nor are they aware of the methods to implement them.  But these laws are indeed there, and they need to be brought into the light, injected into the tax planning process and be applied rightly and fruitfully for each client to help meet his or her financial challenges.  Doing so can bring great reward. 

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It's Time to Launch Your Personal Tax Revolution

President-Elect Donald J. Trump appears set to begin his presidency with a focused eye on sweeping tax reform.  According to media reports, Mr. Trump will look first to bring significant tax relief to businesses to spark economic growth and then move toward lowering the personal income tax rates for us taxpayers. If indeed this is his intent, he will begin a tax revolution the moment he takes the oath of office!

And that makes me think about Boston. I visited this historic city recently and, while overlooking its beautiful harbor, my mind wandered to a different time. I thought about Sam Adams and 150 other patriots masquerading as Mohawk Indians boarding three ships, breaking open the cargo of tea and heaving it all overboard. I imagined how that harbor might have looked as Boston’s first community teapot.  What did they achieve?  As the electrifying news of the “Boston Tea Party” spread, other seaports followed their example and men of action staged their own acts of resistance against excessive taxes.

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Merry Christmas and Happy Holidays!

By Bruce Jones | Dec 23, 2016 | Tax Planning, tax savings

Tax Planning Your Bridge to a More Stress-free Life

By Bruce Jones | Dec 14, 2016 | Tax Planning, tax savings

In my last posting entitled Tax Planning is an Investment Like No Other, we discussed how proactive planning to reduce, defer and sometimes even eliminate taxes offers stunning returns on investment.  As a reminder, the investment is the fee you pay to implement a tax plan and your Return on Investment (ROI) is the tax savings you enjoy by taking advantage of tax law. The real ROI, though, comes in the freedom you have to spend those tax savings any way you wish!

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