Enhancing the Sale of Business by Deferring Capital Gains Tax - Structured Sales
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What if you could offer your clients a way to sell their business and avoid immediate taxation while growing the net proceeds in a tax free form? Would such ability increase your value as a knowledgeable professional in the eyes of your client? Would it allow your client to possibly accept a little less for his business, yet still achieve his financial goals through the sale? The product, a Structured Sale Annuity, offers an exciting new wealth management tool that allows individuals selling their business, property or land the opportunity to place the net gains of their sale into a structured annuity and pay no capital gains tax at the time of sale. In fact, capital gains tax is exchanged for a deferred ordinary income tax liability in the year payments are received and only for the amount received in that calendar year.
Not Your Grandfather's Annuity
The Structured Sale Annuity takes advantage of two IRS Revenue Rulings (82-122 & 75-457) and allows a selling party to place any portion of their net proceeds into a fixed annuity product with a guaranteed yield and rate of return paid back to the seller. Unlike traditional annuities, however, the new Structured Sale Annuity product offered provides unprecedented flexibility in how the guaranteed funds are paid out. The individual can truly design the payment schedule to meet their unique financial needs. Monthly, quarterly, semi-annual or annual payments are all available, as are future lump sums in any combination. Your client has the choice of starting payments immediately (regardless of their age) or deferring payments for up to 20 years, maximizing the tax free growth and creating a subsequently higher yield on the back end.
Perhaps even more important is the fact that a guarantee period can be placed on the payment schedule, ensuring that the annuitant's Estate will continue to receive funds for as long as 40 years, even if they are deceased. This is a great tool to help supplement retirement, fund a college education for children or grandchildren or provide for future lump sums that can be used to take advantage of other investment opportunities, perhaps in a more favorable economic climate. Moreover, this product offers guaranteed financial security, allowing your client to be more aggressive with other investment opportunities. Best of all, leading Life Insurance Carriers guarantee the specific rate of return and payments, all with an A+15 rating by A.M. Best.
Adding Value to the Process
How many times has your client sold their business for less than they had hoped or had to enter into a seller financing relationship in order to secure a larger sales price? By utilizing the Structured Sale concept, your clients can now afford to take a smaller purchase offer in order to relieve their obligation to the business, knowing, again, that they avoid immediate taxation and can grow the net proceeds to a future dollar value higher than the asking price. Moreover, the seller need not be concerned with the fulfillment of payment obligations from potential buyers in a seller financed sale, as they are not directly dependent on the solvency of the buyer. As such, your client can achieve his financial goals with a lower sales price on his asset, obtain guaranteed long term financial security and avoid any investment risk with the proceeds – especially in today's volatile economic environment.
Furthermore, if you represent the buyer in a transaction, the Structured Sale offers an opportunity to purchase a business or parcel of land at a lower figure, offering the seller all of the aforementioned benefits and most important – leaving vital working capital for your client to make the necessary changes they wish to make or invest in marketing strategies to grow the production of the business or develop the land.
The Fine Print
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Chad Ettmueller operates nationally as a Structured Settlement Specialist with Atlas Settlement Group in Atlanta, Georgia. Atlas Settlement Group wants to maximize your role as a broker and do all we can to assure your success. We are excited about this investment vehicle and the ability to help your client turn the sale of his business into a multi generational legacy. Please feel free to call us if you have any questions or if you want to learn more about how Structured Sale Annuities can help you provide the perfect financial solution for your client. Please contact Chad Ettmueller at (404) 926-4160 or cettmueller@atlassettlements.com |