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Donate your business & pocket the tax breaks

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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)

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