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“ A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse… unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account”.
Return must be filed at the time prescribed by law (including extensions).
The election, once made, shall be irrevocable .
If multiple spouses, credit limited to lesser of $5 million or unused credit of last spouse to die regardless of election
C Corporation (15% on first $50,000, top rate 35%)
S Corporation (avoid double tax)
Individual Income Taxes
Ordinary (top bracket 35%)
Capital Gains (15%)
Gift & Estate Tax
Who’s the buyer/transferee
Family or Third Party
What do you “Want” to get out of any transfer?
Buyer/ Transferee Dividend Rec’d - Interest Expense - Income Tax Net Cash available to service debt Seller/ Transferor Interest Income less ordinary Tax Principal less LTGC tax Net Cash to live on Infernal Revenue Service Triple Winner Sale by a “C” Corporation – Most Tax Inefficient KEY: Limit the Taxes by limiting the number of Taxable Transfers
Power to Sprinkle or Spray of Income and or Principal
Maximize Flexibility by “Working with IDIOTs”
Retain power to borrow cash or substitute assets
Spouse as Trustee
Spouse as Sprinkle or Spray beneficiary
Grantor Trust AAA Received - No Income Tax 100% available to service debt Seller/ Transferor Interest + Principal (no tax) Income tax on S Corp Income Net Cash to live on Infernal Revenue Service Income Tax on S Corp Income Only Leveraged Transfer to Grantor Type Trust