Tax On Selling Business

Business Transfer & Investing

The Deferred Sales Trust can help you defer tax on selling your business. Choosing to sell your company or property to the trust can defer capital gains tax. Typically, this tax is extremely high for business and real estate owners. You could be liable to pay 20-35% or more in capital gains taxes after you complete your sale! The Deferred Sales Trust is a powerful strategy that can help you build a passive income stream.

“The Deferred Sales Trust is a proven and legal tax deferral strategy. The challenge is to get rid of fear. To recognize that the Deferred Sales Trust is outside of one's comfort zone. This strategy is new to people."

HOW DO I DEFER CAPITAL GAINS TAX ON MY BUSINESS SALE?

The transfer of your asset to the Deferred Sales Trust is classified as an “installment sale” and is governed by IRC 453 of the Internal Revenue Code. As per the IRS, installment sales are able to defer capital gains taxes because the seller avoids constructive receipt, which requires you to pay taxes on the principal you receive from a sale.

The advantage of the Deferred Sales Trust is the way your monthly payments are structured. You do not receive your principal in a lump-sum because you would then need to pay your capital gains tax on the entire sum.

MONTHLY PAYMENT OPTIONS
RECEIVE A PORTION OF YOUR PROCEEDS EVERY MONTH (YOU PAY CAPITAL GAINS TAX ON THAT PORTION ONLY)
RECEIVE A PORTION OF YOUR PROCEEDS + MONTHLY INTEREST (YOU ONLY PAY CAPITAL GAINS TAX ON THE PORTION OF YOUR PROCEEDS)

WHAT IF I NEED SOME OF MY PROCEEDS RIGHT AWAY? DO I STILL PAY CAPITAL GAINS TAX?

Let’s say you’re ready to sell your business and retire, but you need some of your profit to live off of. You have the option of structuring your monthly payments from the Deferred Sales Trust to best fit your needs. If you need 10% of your profit for retirement, you can take 10% of your principal out over time. You would only pay capital gains tax on the 10% you took out. This is one of the Deferred Sales Trust’s greatest strengths – it offers financial flexibility.

SOLD BUSINESS
NEEDS 10% OF PROFITS FOR LIVING EXPENSES
TAKES OUT 10%, INVESTS THE REST
PAYS CAPITAL GAINS TAX ON THAT 10% ONLY
CAPITAL GAINS TAX ON REST OF MONEY IS DEFERRED

WHO CAN BEST BENEFIT FROM THE DEFERRED SALES TRUST?

The Deferred Sales Trust is especially effective for owners of a company, medical practice, or real estate. If you are a business or property owner looking to get out of the field and retire with alternative cash flow without the stresses of payroll, property upkeep, and tenant relations, then the Deferred Sales Trust may be an ideal exit strategy. The DST can also benefit estate owners looking to sell their property and set up a wealth succession plan for their family.

Freedom Bridge Capital offers free DST analysis for business and property owners looking to sell their assets. We’ll connect you with a qualified professional who can determine if the Deferred Sales Trust is right for you.