Charitable Giving For Smart Sellers
Your friend Paul is selling his business for $2,000,000. His accountant tells him the capital gains tax will be 23.8% or $476,000. $2,000,000 just went to $1,524,000. Ouch!
We recommend a Charitable endowment entity before he signs a sales contract. Paul keeps almost all of the $476,000 in an entity he controls, tax advantaged, and creditor protected.
What does Paul get in the above transaction?
- Eliminates 99% of the capital gain. That money is available for investment.
- Future investment on a tax-advantaged (almost tax free), thus interest compounding on not only the capital gain amount but the net proceeds of the transaction.
- Bulletproof asset protection from creditor on all the money left in the limited liability company ($476,000 plus balance of net sales proceeds)
- Total control by Paul as manager of the endowment entity.
- Easy access to the funds as appropriate by long term loans at minimum interest rate required by the IRS.
Initial charitable deduction substantiated by an appraisal for the donation of membership interest to a charity or donor advised fund. Carry forward for five years.
Do you know anyone like Paul that might be selling a business, selling appreciated assets like stock, or selling a real estate project or investment? Threshold to implement with costs is a capital gain of at least $750,000. Do them a favor by letting them know they can eliminate the capital gains tax.
Contact us to see how we can set this up for you. Call me, James Montgomery, at 210-349-8888 or email: firstname.lastname@example.org