Structured exchange solutions
based upon Section 453 of the IRS code
Over the years we have spoken to many clients selling their business who are looking to avoid or minimize their taxes. Our attorneys have assisted business owners and wealthy individuals by finding ways to protect client assets, while also providing solutions to reduce taxes. Owners who are selling highly appreciated assets, frequently find themselves facing the largest tax bill they will ever see in their life. Existing solutions leave them with the following options:
Completing a traditional sale and paying capital gains tax of up to 37%, drastically reducing their sales proceeds.
Carrying back an installment note, exposing them to buyer default, loss of sales proceeds and possible loss of their entire asset.
Using other tax deferral structures, resulting in little flexibility, historically low interest rate environments, and possible loss of diversification.
Our solution, the Appreciated Asset Exchange, allows our clients:
Get in touch
We at The Asset Exchange, realize that when you're selling a business or other large asset, taxes are often an afterthought. However, the headline sales number is never the amount that you're taking home. So if you are selling your business and want to reduce taxes, we would be happy to offer a free consultation to walk you through various scenarios of how an Appreciated Asset Exchange can help you achieve a better outcome.
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How It Works
An Appreciated Asset Exchange enables owners of appreciated assets to defer Capital Gains Tax and gain Asset Protection, by selling their asset to a Trust, in exchange for a custom promissory note.
The asset(s) is then sold by the trust to an ultimate buyer and the funds from the sale are invested by a third party trustee.
The trust then makes payments to the seller of the asset, according to payment instructions detailed in their custom promissory note.
Client Examples
Business owners selling their business who are looking to minimize taxes and gain asset protection
Business sales are the most common asset used in Appreciated Asset Exchanges. Whether your business is a stock or asset sale, we will work with you to structure an Appreciated Asset Exchange that meets your specific needs and desires. While there is no way to completely avoid taxes, the Appreciated Asset Exchange Structure enables clients to gain asset protection and defer the capital gains taxes so that the pretax proceeds from a business sale can be invested to create significantly larger income than the owner would have been able to create had they sold the business and paid taxes. We provide all prospective clients with a free illustration and consultation so they can fully understand the benefits of the Appreciated Asset Exchange for their business sale. If you are selling your business and want to reduce your taxes from the sale, please give us call to see how an Appreciated Asset Exchange can help you.
Real Estate owners wanting to sell real estate but avoid paying the capital gains taxes
If you are selling real estate, typically, you would utilize the 1031 exchange to defer taxes. The 1031 is an effective tax deferral tool; however, if you want to diversify your holdings into other asset classes, our Appreciated Asset Exchange can provide an effective solution.
clients selling highly appreciated assets such as art or rare automobiles
If you are selling investments such as rare art or automobile collections, you may be subject to taxes at levels higher than traditional assets. As such, you could utilize the Appreciated Asset Exchange to domicile the asset in a state where greater asset protection laws exist and tax deferral can be gained.