Selling Your Business Capital Gains Tax On Business Sales When the time comes to sell your business, you may wonder: “How should I be selling my business?” “How can I maximize the profits from my sale?” The thought of navigating and negotiating a business sale is daunting. Many owners are told of the potential profits of selling their business, but often this does not account for capital gains tax, which can be 20-35% of your overall proceeds. The thought of losing one-fifth of your hard-earned profit can be very discouraging. Fortunately, the Deferred Sales Trust offers a solution. Selling your business to the Deferred Sales Trust can defer capital gains tax. “The Deferred Sales Trust defers capital gains taxes on highly appreciated entities.” HOW DO I SELL MY BUSINESS TO THE DEFERRED SALES TRUST? The Freedom Bridge Capital team is with you every step of the way when selling your business. We will buy your business, and in return, you are given a promissory note from the trust that agrees to pay you monthly installments of your proceeds. The trust will then sell your practice to another buyer, and the proceeds are used to secure your promissory note. By selling your business to the trust, you are able to defer your capital gains taxes on the sale.
WHICH TYPES OF BUSINESSES CAN BE SOLD TO THE DST? The deferred sales trust can help business owners of any kind sell their assets and defer capital gains tax. Below are just some of the common business transactions we handle: SMALL BUSINESSES SERVICE BUSINESSES CONSULTING FIRMS MERCHANDISING BUSINESSES DEALERSHIPS AGENCIES RESTAURANTS MANUFACTURING BUSINESSES HOW DOES THE DST DEFER CAPITAL GAINS TAX ON MY BUSINESS SALE? The legal basis for the Deferred Sales Trust can be found in IRC 453 of the tax code. Selling your business to the Deferred Sales Trust is deemed an “installment sale,” found in IRC 453. You are selling your business to the trust in exchange for a promissory note instead of selling your business directly to the buyer for the profits. Installment sales, as defined in IRC 453, allow the seller to legally defer capital gains tax on their business sale. In order to do so, the seller must report the income of the sale to the IRS by filling out Form 6252. WHICH ASSETS CAN THE TRUST INVST IN TO SECURE MY PROMISSORY NOTE? One of the Deferred Sales Trust’s biggest advantages is its flexibility. Once you sell your business to the trust, the trust can secure your investments through a variety of different assets, including: STOCKS BONDS ANNUITIES CDS MUTUAL FUNDS INDEX FUNDS ETFS REITS PROPERTY COLLECTIBLES WHAT IF I NEED SOME OF THE SALES PROFITS? You may wish to take a portion of your business sale profit. In this case, you would be required to pay capital gains tax on the portion you take out. For example, if you took 10% of your overall proceeds in a lump-sum, you would pay capital gains tax on that 10% only. The trust would then invest and defer capital gains tax on the other 90%.
SCHEDULE YOUR FREE VIDEO CONSULTATION A ONE-ON-ONE WITH OUR DST TRUSTEE Schedule a free video consultation with our deferred sales trust specialists today! Our estate planning team offers complimentary DST analyses to determine your estimated tax savings using the deferred sale trust investment strategy. We’re here to answer any questions you may have about the deferred sales trust and help you get started on the sale of your company, practice, or property. Please Enter First Name Please Enter Last Name Please Enter Email Address Please Enter a valid Email Address. Please Enter Phone Please Enter Valid Phone Select the Paper Clip
HOW DO I LEARN MORE ABOUT SELLING MY BUSINESS TO THE DEFERRED SALES TRUST? The Freedom Bridge Capital team would be happy to speak with you in more detail regarding selling your business to the Deferred Sales Trust. Please give us a call at 800-897-0212 or request your free DST analysis today by filling out the form below.
