Category: Pay No Tax

Tax Free Charity

A Charitable Tax Break

The problem with most tax planning is that you have to give up something to get something. To get an income tax deduction you must spend a dollar to save taxation on a dollar. To get a deduction for a business expense, you must incur a business expense. To get a personal deduction you must pay a deductible expense.

Income taxes are not at a 100% rate thankfully, so one normally thinks wisely before spending a dollar to save tax on a dollar, usually about 40% (35% federal plus state tax). Then if you save the dollar long enough your estate may become so large that it has to pay an estate tax of almost 50% (currently 47%). Let’s not forget FICA and Medicare, both sides being around 15%. Phew, it’s no wonder why most people loathe the IRS and tax time.

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Pay No Business Tax

SELL YOUR COMPANY AND PAY NO TAX!

Your business has matured, or your real estate has appreciated, time to cash out and sell.  It has taken a long time, and since you have held your shares or real estate for greater than one year, the gain qualifies for long-term capital gain taxation.  A 15% federal tax rate; not bad!

Yet, 15% of a $10,000,000 gain is $1,500,000.  With a $20,000,000 gain it is $3,000,000.  That is an awful lot of money.

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