Donate your business & pocket the tax breaks — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Donate your business & pocket the tax breaks

Get PDF file

by on
in Small Business Tax

Are you planning to sell your business soon? Your huge payday could turn into a huge capital gain.

But you can reduce your resulting tax bill, provide for a comfortable retirement and help out a favorite charity in one shot.

Strategy: Donate the business ownership interest to a charitable remainder unitrust (CRUT). The CRUT can sell the business later, generating cash that the trust can reinvest elsewhere.

Note of caution: You can’t pre-arrange the business’s sale at the time it is donated to the CRUT. But you can still run the company during the pre-sale stage.

Example: In charity we trust

Let’s say your business is worth $3 million, and you have no tax basis in the company stock. In that case, selling the business would present you with a $450,000 federal income tax bill at the 15 percent tax rate for long-term capital gain (not even counting any possible state and local income taxes).

Instead of triggering that huge tax b...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Related Articles...

Leave a Comment


Previous post:

Next post: