Strategic Planning, Gift Taxes, and Disposing of a Business

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AXHEHZNU

Business Finance

Description

Specifically, the following critical elements must be addressed:

Memorandum

  • Create a detailed tax planning proposal explaining how the client’s family can experience tax savings should the client pass away. Cite relevant governing rules and regulations.
  • Illustrate a strategic plan that addresses the need for a will in handling the estate. Detail what happens to the business, land, and investments consistent with tax codes and regulations. Consider extending the plan to address the client’s estate tax, trust, and charitable contributions while minimizing estate tax.
  • Recommend estate planning strategies consistent with tax codes and regulations for the purpose of reducing the taxable estate. Be sure to include gifting property to heirs in your response.
  • Illustrate the best course of action if the client decides to leave the business in three years. Provide some advice to him should he decide to gift the business to his daughter or transfer the assets or common stock to her, depending on the business entity you have selected.
  • Illustrate the best course of action if the client wishes to sell the business. Consider the tax consequences with regard to capital gains and losses, ordinary income issues, and selling an existing operating business.

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Explanation & Answer

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Running head: TAX PLANNING PROPOSAL

Tax Planning Proposal
Student’s Name
Institution Affiliation

1

TAX PLANNING PROPOSAL

2
Memorandum

ANSWER FOR F.
Bob is really concerned as to what will happen to his business and assets when he passes.
He had already established a partnership with his daughter in his used car dealership. The best
advantage for Bob is to plan ahead which has started to do so. Currently Bob has control of all of
this wealth which a huge benefit for him because he is able to maintain and control how and
where money goes. A way that Bob’s family can experience tax savings when he passes is to
establish trust funds, gifting and a will. This planning would help with the tax saving for Bob and
his family and also will ensure that Bob’s assets would be protected when Bob does pass away.

ANSWER FOR G.
It is important that Bob gets familiar with the regulations and tax codes so that he will be
aware what is needed to be done when handling the will for his estate. Bob’s first step is to create
a legal document that would outline what would take an effect once he passes away also he
would need to establish who the executor will be. This is the person who will handle the
instructions as to for the will for the estate. As per the publication 559, estate tax which is
deductible includes the tax on the taxable estate, reduced by any permitted credits.
Bob has a total of $9,000,000 in land that he purchased in 1966 and$2,000,000 in the land
and building for this used car dealership. This property would have to be distributed to his
family. If Bob decides to gift his daughter his assets then the property should be received as a
gift since it isn't included in the income. In the event, however, property gotten in this way
creates revenue, for instance, rents, dividends, interest, that revenue is taxable. In the event that
the gift is the revenue from property, then that is taxable income. We cannot establish if Bob had

TAX PLANNING PROPOSAL

3

a wife but we can establish that wishes his daughter are actively involved in the affairs of his
business (Publication 559).

ANSWER FOR H
Bob has the opportunity to get a head start on planning for the future for his family. The
estate planning strategies that I recommend for Bob is to start transferring his wealth before his
passes away. With the present gift tax and federal estate topping out at 40% for rich people,
reducing his taxable estate is the first line of defense in preserve his assets for heirs of Bob. At
present, you can give up to $15,000 to any number of individuals in one year have to incur a gift
tax ($30,000 for couples coalescing gifts). Also, every member of the family has a collective
lifetime exception before any out-of-pocket gift tax is due. This means, under current law you
can give away up to $5.45 million during your lifetime over and above the yearly $15,000
exclusion and any compensations directly made to providers of education or medication on
behalf of another person and still shun gift tax.

ANSWER FOR I
In the event that Bob were to sell or leave his business he ought to talk about the change
with a lawyer or legal and tax professionals in advance to discuss tax techniques. Bob ought to
plan to gift the business to his daughter. The benefits of gifting the business are gifts are regarded
to be tax restricted in the li...


Anonymous
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