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DEFERRED SALE TRUST INFORMATION
How to legally eliminate Capital Gains Taxes on sale of business or real Estate
ELIMINATE AND LEGALLY DEFER US CAPITAL GAINS TAX ON SALE OF BUSINESS OR OTHER ASSETS
Deferred Sales Trust Introduction
If you are considering the sale of a business, corporation, or investment real estate, you may face capital gains taxes associated with the sale. For the investor who does not want to continue holding investment property or remain in the same business, a Deferred Sales Trust should be considered.
According to a section of the Internal Revenue Code, the Deferred Sales Trust provides investors/owners/ a solution whereby they can LEGALLY defer capital gains upon sale of their assets and redirect the sale proceeds into cash or whichever types of investments suit their needs, income requirements, and objectives. This can include the purchase of another business! THE trust will be set up with a major investment bank or Trust Company for security and safety.
What is a Deferred Sales Trust?
The Deferred Sales Trust is a legal contract between you and a third-party trust in which you sell real or personal property or a business to the Deferred Sales Trust in exchange for the Deferred Sales Trust's contractual promise to pay you a certain amount over a predetermined future period of time in the form of an installment sale note or promissory note. It is often referred to as a "self- directed note" because you have control over the terms of the note. The Deferred Sales Trust gives you the ability to control your capital gains tax exposure, reinvestment terms, and installment payments made from the trust.
THE DEFERRED SALES TRUST
The Trust Installment Contract is formed by the investor with the Trust to set the investment criteria for the sale proceeds as well as the schedule of cash flow. Cash flow can be paid to the investor in the forms of principal, interest, or a combination thereof. Only when principal is returned to the investor is it subject to capital gains tax. The Contract can be renewed, amended, or canceled at the investor's discretion. Any material contract management amendment, or renewal must be within IRS guidelines.
How Does a Deferred Sales Trust Work?
The process begins when a property or business owner transfers his asset to a trust managed by a third-party company on his behalf. The third-party company acts as trustee over the asset, and the owner is the beneficiary of the trust that holds the asset. The trust will sell the asset for the owner and manage and distribute the sales proceeds of the trust according to an agreed upon installment contract that the owner sets up ahead of time with the trust. The sales proceeds can be held in cash, reinvested, and distributed according to the direction of the owner's installment contract. There are zero taxes to the trust on the sale, since the trust purchases the property from the owner for the same price for which it is sold.
The tax code does not require payment of any of the capital gains taxes until an investor starts receiving installment payments that include principal.
The owner then is able to control if, when, and how there will be capital gains tax exposure over the installment contract period by adjusting the installment contract.
The installment contract between the owner and the trust company provides flexible options on when and how payments can be made. Initially, the owner may have other income and may not need the installment.
Guidelines for the Deferred Sates Trust to Qualify
Trust Structure: In order for a Deferred Sales Trust to qualify for capital gains tax deferral, it must be considered a bona fide, third-party trust with a legitimate, third- party trustee.
WE ARRANGE ALL FACETS OF THE PROCESS FOR YOU TO DISCUSS WITH YOU FINANCIAL ADVISORS OR ATTORNEY.
Independent Trustee: The Deferred Sales Trust must employ a t
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