LOOKING FOR ANOTHER WAY TO DEFER YOUR TAX BURDEN?

I recently attended a seminar put on by Lutgert Insurance's Rick Mayher and Keith Klipstein. Here is some information that Rick provided describing how to defer from paying taxes through a Structured Sale. It's a great vehicle for cashing out on an existing property and reaping the benefits of a delayed payoff. Feel free to call me or contact Rick whose information is available at the end of this post

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Here is the latest crackdown by Uncle Sam. But, it's good news for us who can help clients sell highly appreciated assets,
like real estate and business interests, and still defer capital gains taxes.

The Treasury and IRS proposed Regulations yesterday under Code Sections 72 and 1001 that will significantly impact Private Annuities and Private Annuity
Trusts. In general, the proposed Regs would end the tax deferral of an exchange of property for most private or commercial annuity contracts issued after October 18, 2006. The seller of property for an annuity will immediately recognize gain as if they realized the full fair market value of the annuity contract.

Rev.Rul. 69-74 will be obsolete effective April 18, 2007 for exchanges described in §1.1001-1(j)(2)(ii) and §1.72-6(e)(2)(ii), and effective October 18, 2006 for all other exchanges of property for an annuity.

With the IRS coming down on private annuity trusts, what options remain for an individual with highly appreciated assets? What about a structured sale? By structuring the sale of a real estate asset, the seller can defer recognition of the taxable gain while receiving
a fixed guarantee rate of return. The "Structured Sale" allows the seller to customize a payment stream to meet cash flow needs, provides long-term financial security, and most of all alleviates concern that the buyer will make the future periodic payments that were agreed according to the purchase agreement. There is no market fluctuation because the funds are not in the stock market, no trust needs to be established, and no management fees are charged. It is very clean and simple.

Unlike a Private Annuity Trust, a structured sale is an alternative to a 1031 exchange. If the IRS wanted to go after structured sales, then the service would have to take apart installment sales rules and structured settlements. Private Annuity Trusts were trying to avoid taxation on things like depreciation recapture and the IRS rarely looks favorably on tactics that avoid taxes.

For more information on this topic and other exit planning strategies, please call or email me.

Rick Mayher, CLU, ChFC
Business & Estate Planning
Lutgert Insurance
1395 Panther Lane, Suite 100
Naples, FL 34109
rmayher@lutgertinsurance.com
239-262-7171, Ext. 254
800-842-1359
239-249-0251 (Cell)