text: It's In The Details: Part One - Tembo CPAs
  Business SuccessInnovative Solutions
  When details are overlooked, clients often pay too much tax.
  This is why our team at Tembo CPAs are experts at extracting the details that matter and using them to benefit our clients.
  One particular client owned a successful business. He was in his early 60s and wanted a succession plan in place. He was looking to gift the business to one of his key employees in exchange for having this key employee run the business for him for the next few years.
  Unfortunately, there's a slight issue with this:
  There is a tax rule that states that if you gift an employee ownership interest in your business the gift must be treated as "transfer for consideration." This means the IRS will treat the value of the business being given to the employee as W-2 income.
  The business is worth around $3 million dollars.
  If our client gave the business to the key employee he'd be giving him taxable income of $3 million dollars and the employee would end up with a tax liability of $1.5 million dollars.
  That's a big tax bill for the key employee, and a definite deal breaker!
  Our team looked at this situation and dove into the details of the business to better understand the goals of the current owner.
  We were able to restructure the transaction and turn it into a sale that, if financed over the ten year period, would not only eliminate the tax bill for the key employee, but would also save the current owner $400,000 dollars in tax over that time period.
  And restructuring the transaction in this way not only met the requirements of the IRS, but it achieved the goals of both the business owner and the key employee.
  Be sure to stay tuned for part two next week.
  Categories: Business Success, Innovative SolutionsBy Montoya Miller April 26, 2019
  Tags: businessbusiness goalsbusiness successclarityclient successentrepreneurexecutionfinancefocusgoalsgrowthidentifying datainnovationIRSmoneyresourcefulsavingsaving moneysuccesssuccessful businesstaxtax lawtaxesvision
  Author: Montoya Miller
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