Picture you in the driver seat steering your clients financial future with the flexibility to defer payments as needed. Structured Sales open up a spectrum of choices for when and how your clients receive money.
$750k Cash Sale vs. Structured Sale:
As a trusted advisor to high-net-worth individuals, you understand the critical importance of tax efficiency in managing liquidity events. Selling a highly appreciated asset, such as a closely held business, can create substantial wealth but also significant tax liability without proper planning. For example, an owner selling their business for $750,000 (with a capital gain of $650,000) can benefit from a structured sale. By spreading out the tax liability over 10 years starting January 1, 2024, this approach optimizes tax outcomes and preserves net proceeds for retirement or legacy purposes.
2024 Federal Capital Gains Rates*
Single Taxpayer | Married Filing Jointly | Capital Gain Tax Rate | Section 1411 Medicare Surtax | Combined Tax Rate |
---|---|---|---|---|
$0 - $47,025 | $0 - $94,050 | 0% | 0% | 0% |
$47,025 - $200,000 | $94,051 - $250,000 | 15% | 0% | 15% |
$200,001 - $518,900 | $250,001 - $583,750 | 15% | 3.8% | 18.8% |
$518,901+ | $583,751+ | 20% | 3.8% | 23.8% |
COMPARISON | Cash Sale |
Structured Sale |
---|---|---|
SALE PRICE | $750,000 | $750,000 |
CAPITAL GAIN | $650,000 | $650,000 |
CAPITAL GAINS TAX | $136,520 | $0 |
NET TO INVEST | $613,480 | $750,000 |
TOTAL PROJECTED ANNUAL INCOME (after tax) | $60,552 / year | $95,617 / year |
As an advisor, you play a crucial role in helping clients navigate complex liquidity events and achieve their long-term financial objectives. By partnering with us to implement structured installment sale strategies, you can deliver significant value to your clients while differentiating your practice and deepening client relationships. On top of that it most likely will add to your Assets Under Management by 15-50%.
To learn more about how we can support you in serving your clients' needs, please contact our team today. We look forward to working with you to create tailored solutions that maximize after-tax proceeds and secure your clients' financial legacies.
The Power of Tax Deferral:
Rather than receiving a lump sum payment, the total tax liability is spread out over 10 years, allowing for more effective tax planning and cash flow management.
By Structuring the Sale proceeds pretax, the after tax income earned for the recipient is $35,065 more each year!
Capital Gains taxes are eliminated altogether!
How It Works
Buyer and Seller Agree on terms
An individual or business sells a qualifying asset to a buyer for cash and/or a promise of future periodic payments, qualifying as an installment sale under IRC Sec. 453.
Assignment Company
The buyer assigns the payment obligation and sends funds to the Assignment Company. In exchange, the Assignment Company assumes the obligation to make periodic payments as outlined in the Installment Sales Agreement, in accordance with Revenue Rulings 75-457 and 82-122.
Brokerage Account Established
The Assignment Company establishes an investment account with the RIA and deposits the funds for the benefit of the seller. The RIA prepares an IPS aligning with the terms of the Installment Sales Agreement.
Custodian Disburses Periodic Payments
The Assignment Company instructs the custodian to make periodic payments directly to the seller based on the agreed-upon terms of the Installment Sales Agreement.
Buyer and Seller Agree on terms
An individual or business sells a qualifying asset to a buyer for cash and/or a promise of future periodic payments, qualifying as an installment sale under IRC Sec. 453.
Assignment Company
The buyer assigns the payment obligation and sends funds to the Assignment Company. In exchange, the Assignment Company assumes the obligation to make periodic payments as outlined in the Installment Sales Agreement, in accordance with Revenue Rulings 75-457 and 82-122.
Brokerage Account Established
The Assignment Company establishes an investment account with the RIA and deposits the funds for the benefit of the seller. The RIA prepares an IPS aligning with the terms of the Installment Sales Agreement.
Custodian Disburses Periodic Payments
The Assignment Company instructs the custodian to make periodic payments directly to the seller based on the agreed-upon terms of the Installment Sales Agreement.
Deliver more for your clients
Tax Control Strategies offers Wealth Advisors a seamless process known as a Structured Sale, an innovative deferred compensation tool and exit strategy designed to reduce or eliminate capital gains and ordinary income taxes. This strategy provides a flexible periodic payment schedule for appreciated asset sale and contingent bonus proceeds.
Reduce or possibly eliminate federal taxes
Invest pre-tax proceeds into any liquid asset class
Predictable & customized payments to the recipient
20 years’ experience delivering Tax-advantaged deferred compensation solutions
*Tax-Free liquidity after the sale
FAQs
Tax Control Strategies is committed to providing an innovative structured sale solution that can reduce or eliminate capital gains taxes.
Structured Sales empower clients selling high-value assets with tax efficiency and transactional security, allowing advisors to customize income and tax flow to harmonize with clients' long-term fiscal goals for confident and clear future planning.
Structured Sales serve a wide range of assets, including private businesses, commercial real estate, and appreciated art and jewelry, with a special focus on high-value agricultural properties where specific tax benefits apply, acting as a financial Swiss Army knife to maximize asset value and provide tailored solutions.