Steve A Porter, CPA

Editor’s Note: The IRS and Treasury Department have enacted regulations that  severely limit the effectiveness and use of private annuity trusts as an income  and estate planning strategy. The regulation covers all private annuity  trusts created after October 18, 2006. All trusts created before this date are  grandfathered and will continue to receive the tax benefits of the  trust.

The biggest change is the elimination of the deferral of  capital gains taxes on all future private annuities. Without that feature,  many individuals will be forced to look at other strategies to determine what  would be best for their situations. Therefore, before you implement any strategy  discussed in this article, be sure to consult a legal and tax professional.

“I would rather expire at my desk than to sell my business and pay Uncle Sam one dime in taxes.” How many owners that have paid their fair share of taxes for twenty years of building their business feel this way? The tax bite is the single biggest factor in an owner’s reluctance to sell his/her company.

I have previously written articles discussing various aspects of transaction structures to minimize taxes. As a result, I am often contacted by a panicked seller that is a week from closing his business sale as he looks in disbelief at his accountant’s spreadsheet detailing the tax burden of his impending sale. (more…)

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