By Brad MacLiver
Authorship and profile at Google
Nearly everything you own and use for personal, or business, purposes is a capital asset. When SD pharmacy owners sell a capital asset, the difference between the amounts you sell it for and the amount you paid for it (the basis), is a capital gain, or a capital loss.
Capital gains or losses can also refer to investment income that comes up in relation to real assets, such as property, financial assets, and various intangible assets such as goodwill. All capital gains must be reported with the appropriate tax paid in theUnited States
There are specific tax strategies that can be used to help offset the tax liabilities when selling a pharmacy or a drug store inSouth Dakota
In this period of history where it is not as easy to finance businesses, pharmacy sellers may already have been forced to lower their asking price so a pharmacy buyer is able to qualify for the required financing. On top this, they should expect to pay higher percentages in taxes.
For pharmacy sellers who wants as much money out of the deal as they can get, this is a big dilemma. For most pharmacy owners in SD, their business is the more valuable asset they will ever own and selling their business at a high enough dollar amount has been part of their retirement and estate planning. Also knowing they will need to pay a larger portion of the proceeds to give to the government will cause some pharmacy owners to reconsider their retirement plans. The good news is there are financial tools and strategies that allow theSouth Dakota
Family Foundations are tax exempt/nonprofit organizations, which provide tax advantages and control over philanthropic activities. Family foundations are typically private foundations that are funded by a small number of sources, and do not conduct widespread fund-raising activities. They may receive gifts from friends and limited sources. Family members serve as trustees, directors, and officers. As private foundations they can make grants, or donations to other organizations. Having a Family Foundation provides a number of benefits including, income tax deductions, exemptions from estate and gift taxes, along with the reduction or elimination of other taxes.
One strategy, but not the only one, that is currently available to assist the capital gains tax burden is the Charitable Remainder Trust (CRT). CRT’s are legally described as Split Interest Trusts. The term is used because of the blend of philanthropic motivations and personal financial aspects. CRT’s can decrease tax liabilities, increase a business owner financial wealth, and at the same time provide a vehicle for charitable giving.
CRT’s are formed when a person donates assets to this special type of Trust. Assets can be cash, stocks, real estate, etc. The CRT is set up for a set period of time, or until the donor’s (pharmacy owners) death. An individual (pharmacy owner or family member) can receive income from the Trust’s assets. Upon the donor’s death the assets go to a designated charity. Part of the income from the Trust can be used to purchase life insurance on the donor. The proceeds of the life insurance go to a designated heir(s) who receive the money without incurring any estate tax liability.
Some tax strategies including the use of CRTs are not widely known. It would be advisable for SD pharmacy business owners to be aware of the different tools that are available in structuring a business transaction. They should also be aware that only a professional with vast experience in CRTs should be used to setup a Charitable Remainder Trust. Not following the strict IRS guidelines could be cause for increased taxes, penalties, and in some cases criminal charges.
Over the years there have been unscrupulous individuals who have tried using CRTs and similar financial tools in illegal scams. With the increase in capital gains taxes there are expectations more scams will be floating around out there. Be knowledgeable about the possibilities, but be confident you are working with experts in your industry.
You should consult a firm with extensive experience inSouth Dakota
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Authorship and profile at Google
Nearly everything you own and use for personal, or business, purposes is a capital asset. When SD pharmacy owners sell a capital asset, the difference between the amounts you sell it for and the amount you paid for it (the basis), is a capital gain, or a capital loss.
Capital gains or losses can also refer to investment income that comes up in relation to real assets, such as property, financial assets, and various intangible assets such as goodwill. All capital gains must be reported with the appropriate tax paid in the
There are specific tax strategies that can be used to help offset the tax liabilities when selling a pharmacy or a drug store in
In this period of history where it is not as easy to finance businesses, pharmacy sellers may already have been forced to lower their asking price so a pharmacy buyer is able to qualify for the required financing. On top this, they should expect to pay higher percentages in taxes.
For pharmacy sellers who wants as much money out of the deal as they can get, this is a big dilemma. For most pharmacy owners in SD, their business is the more valuable asset they will ever own and selling their business at a high enough dollar amount has been part of their retirement and estate planning. Also knowing they will need to pay a larger portion of the proceeds to give to the government will cause some pharmacy owners to reconsider their retirement plans. The good news is there are financial tools and strategies that allow the
Family Foundations are tax exempt/nonprofit organizations, which provide tax advantages and control over philanthropic activities. Family foundations are typically private foundations that are funded by a small number of sources, and do not conduct widespread fund-raising activities. They may receive gifts from friends and limited sources. Family members serve as trustees, directors, and officers. As private foundations they can make grants, or donations to other organizations. Having a Family Foundation provides a number of benefits including, income tax deductions, exemptions from estate and gift taxes, along with the reduction or elimination of other taxes.
One strategy, but not the only one, that is currently available to assist the capital gains tax burden is the Charitable Remainder Trust (CRT). CRT’s are legally described as Split Interest Trusts. The term is used because of the blend of philanthropic motivations and personal financial aspects. CRT’s can decrease tax liabilities, increase a business owner financial wealth, and at the same time provide a vehicle for charitable giving.
CRT’s are formed when a person donates assets to this special type of Trust. Assets can be cash, stocks, real estate, etc. The CRT is set up for a set period of time, or until the donor’s (pharmacy owners) death. An individual (pharmacy owner or family member) can receive income from the Trust’s assets. Upon the donor’s death the assets go to a designated charity. Part of the income from the Trust can be used to purchase life insurance on the donor. The proceeds of the life insurance go to a designated heir(s) who receive the money without incurring any estate tax liability.
Some tax strategies including the use of CRTs are not widely known. It would be advisable for SD pharmacy business owners to be aware of the different tools that are available in structuring a business transaction. They should also be aware that only a professional with vast experience in CRTs should be used to setup a Charitable Remainder Trust. Not following the strict IRS guidelines could be cause for increased taxes, penalties, and in some cases criminal charges.
Over the years there have been unscrupulous individuals who have tried using CRTs and similar financial tools in illegal scams. With the increase in capital gains taxes there are expectations more scams will be floating around out there. Be knowledgeable about the possibilities, but be confident you are working with experts in your industry.
You should consult a firm with extensive experience in
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