Here are answers to the most common questions we receive about the Specialized Asset Sale (SAS) approach to selling a highly appreciated asset.
1. What types of assets can I sell using the SAS?
The SAS is a straightforward and effective way to defer capital gains tax due upon the sale of virtually any highly-appreciated asset, including:
- All real estate – residential, commercial, primary residence, investment property
- Businesses – including professional practices (Medical, Dental, etc.)
- Collectibles – Art, automobile, antiques, etc.
- Partnerships, Partner Buyouts, Sole Proprietorships, Corporations, and LLCs
- Contract and Mineral Rights
- Privately Held stock
- The Exceptions: dealer inventory and securities sold through a public exchange
2. Who may benefit from the SAS?
- Sellers of highly-appreciated capital assets with a minimum sale price of $1,000,000
- Sellers of appreciated assets who desire a true exit strategy
- Sellers who do not want to give their asset to charity or are limited by annuity payments
- Any seller facing a substantial tax obligation at closing from:
- Capital gain
- Cancellation of debt
- Depreciation recapture
- Expected failure of a 1031 exchange
- Pre-payment of an installment debt
3. What are the benefits of the SAS?
- Enables seller to defer capital gains tax payment for decades
- Allows seller to receive a tax-free lump sum cash payment at escrow closing nearly equivalent to sale proceeds
- Gives seller the freedom to invest lump sum in any way they choose
- Does not require seller to give their asset away to charity
- Allows seller to pay the tax decades later with inflation-adjusted dollars
The SAS allows a seller to retain money that would otherwise be paid in taxes for the year of sale and use these funds for business or investment purposes.
4. What are the SAS benefits over a 1031 Exchange?
- Provides a true exit strategy for those wanting to get out of real estate ownership
- Replacement property purchase and time-frame requirements are eliminated
- Has no “like-kind” restriction if subsequent property is purchased
- Does not compromise bargaining position because of arbitrary time limits
- Allows proceeds to be used to purchase any investment class, not just real estate
- Allows for sale of capital assets to related parties
- May rescue a failed 1031 exchange
- Can provide greater tax benefit if you choose to purchase new properties
In nearly every instance, a SAS will provide for greater flexibility, control and tax benefit than the rigid and arbitrary 1031 exchange.
5. Is the SAS 'approved' by the IRS?
In 2012 the Office of the Chief Counsel of the IRS issued a memorandum that supports the combination of steps involved which are the foundation for SAS.
- The memorandum states: “The Transaction allowed Taxpayer to take advantage of tax deferral on the Asset sale, which is a permitted result…“
The steps utilized to achieve tax deferral have been in the tax code for nearly 100 years.
Further, The SAS has been researched by numerous tax professionals who have concluded that…
- In nearly every situation, the SAS is the most tax-efficient, versatile, unentangled and profitable way to sell capital assets – whether the asset is held for business, investment or personal use.
6. Why hasn't my CPA or tax attorney told me about SAS?
- Most CPAs are focused on tax law compliance, not proactive tax planning.
- With more than 72,000 pages to the active tax law today, it is not surprising that a CPA is not familiar with this tax planning approach.
- The SAS was designed more than 20 years ago by an attorney specializing in real estate and business transactions to solve a client’s capital gains tax liability regarding property that had been sold.
- Although not widely known, this planning method is a lawful and effective way to solve the tax concerns when selling property and gain greater benefit when escrow closes.
We strongly encourage you to involve your financial, accounting, tax and legal professionals in the SAS process at the earliest possible time.
7. How can I estimate my capital gains tax liability?
Each Estimator illustrates the likely result of selling a property without appropriate tax planning, providing the first part of our Tax Analysis. This is an estimate of your net sale proceeds, taxable gain, and amount of capital gains tax liability. This tax liability represents the dollar amount that might be due and payable to the government for the current tax year (non-deferred).
8. How does the SAS compare to other capital gains tax strategies?
With the SAS you are NOT required to:
- Use or form a trust, foundation or corporate entity
- Purchase insurance products
- Move money off-shore or use foreign accounts
- Endure a sometimes difficult-to-achieve transaction like that of a 1031 Exchange
- Hire new tax, legal or financial advisors
The SAS provides a seller extraordinary flexibility and control vs. being required to pay tax or follow rigid 1031 exchange rules.
9. Do you have any specific case studies showing how the SAS has helped your clients?
Download Our Free Report, Where We Show You Actual Results of Several Asset Sales Attained by Savvy Wealthy Investors
|These investors improved their financial outcomes when selling real estate|
|Business owners got more cash after selling through proper tax planning|