Structured Installment Sales offer a fantastic solution to the tax issues surrounding the sale of business or property. Approved by the IRS, a Section 453 Structured Installment Sale allows individuals to defer taxes, maximize the sale and secure their financial futures. Take a look at our brochure and visit our website for more information. We look forward to helping you where and when appropriate.
Aging Property Owners with Passive Income Needs for Retirement At Safe Harbor Asset Management, we frequently receive inquiries from investors considered real estate-rich and cash-poor, who have locked up most of their wealth in assets like real estate that are difficult to convert into cash. Read More:
Defer Taxes, Maximize the Sale, Secure the Financial Future…. Chad Ettmueller – JCR Settlements, LLC. What if you could offer your clients a way to sell their business, property or other appreciated asset and avoid immediate tax obligations while growing the net proceeds in an attractive, tax-deferred manner with future payments they design unique to their needs? If it seems too good to be true, you need to explore Structured Installment Sales (SIS). Following approved IRS guidelines under IRC Section 453, Structured Installment Sales allow an individual the unique opportunity to defer their immediate tax obligation by placing a portion of their net proceeds into an annuity product with highly rated life insurance carriers. In so doing the Seller avoids constructive receipt of the funds and the IRS cannot tax them on that portion of the sale. Sellers can design a future payment schedule that meets their unique needs, realizing significant income growth through the investment (as high as 10% depending on the design), paying a deferred tax obligation in the future year(s) when annuity payment is received. The Seller will pay both a pro-rated Capital Gains tax (at the cap-gains rate in the year payment is received) and a pro-rated Ordinary Income tax on the interest earned. Traditional Installment Sales transact between the Buyer and the Seller and are wrought with risk, as the Seller is dependent on the creditworthiness of the Buyer and is hoping they will successfully make the future payments. A SIS changes everything, placing the creditworthiness of the life insurance company at the forefront of the transaction and allowing both parties to move forward without future risk. Moreover, as a result of the investment growth associated with the annuity, the Seller can quite often entertain offers that are lower than they have targeted, knowing the investment yield will more than make up for the difference. Combine that growth with the immediate tax savings on the portion placed into the annuity and the Structured Installment Sale offers a serious solution to many sales transactions. In fact, more and more savvy Buyers are making offers wherein they incorporate a SIS as part of their offer. As a result, they are able to offer the Seller (ultimately) more than asking price while securing the property or business at a discounted price, providing them more immediate operating capital to make necessary enhancements to the property or business. If all of this is not exciting enough, there are other highlights to the Structured Installment Sale: – Seller can defer first payment up to 40 years. – No investment minimums or maximums. – Include future payment schedules to match future needs, including monthly, quarterly, semi-annual or annual payments and lump sums on identified future dates. – Index linked, market-based growth, with a guaranteed floor payment and uncapped growth based on market performance. – For use in the sale of businesses, real estate or appreciated asset collections (art collections, vintage vehicles, wine, etc.) – Backed by highly rated life insurance markets. SHOW ME THE MONEY Please take a look at the attached illustration for a real life example of how the product works and the type of income such a solution can produce. The highlighted area on page 3 will show the projected yields. Pages 5-6 will show the projected monthly income. As a quick example, a 51-year-old Seller in Florida sold his business for $25M. He placed $10M of the purchase into a Structured Installment Sale, saving approximately $1M in immediate tax obligations. He deferred first payment 14 years, to his age 65, taking monthly payments for twenty (20) years thereafter. Based on the projected growth of the Indexed linked annuity, and back testing, all the way back to 2006, the Seller is projected to earn between $50.5 and $157M, with a projected median growth of $85.5M. These are jaw dropping numbers to say the least and illustrate the power of the product. KEY CONSIDERATIONS To comport with IRS guidelines, the payment schedule for any SIS must be incorporated into the Sales Agreement as an addendum to the sale. All parties must sign an assignment document, acknowledging the fact that all future payments are forthcoming from the life company, and not the Buyer. Payment for the annuity must go directly from the Buyer to the Life Insurance Company with whom the SIS is placed to avoid constructive receipt by the Seller. If funds are deposited into the Seller’s account, this will trigger constructive receipt in the eyes of the IRS and an immediate tax obligation will be required and a structured installment sale cannot take place. Depreciation Recapture cannot be placed into a SIS. All depreciation recapture must be recorded and appropriate taxes paid in the year of sale. Deposits of more than $5M into the SIS will trigger an IRS Interest Penalty on an annual basis. This penalty is nominal and an annual lump sum equal to the penalty amount can be established, through the future payment schedule of the annuity, to pay this obligation. Structured Installment Sales offer a remarkable advantage to all parties involved in a given transaction and should be considered in nearly every sale. There are no associated costs to establish a structured installment sale now, or in the future. However, such a sale must be coordinated by a licensed and appointed annuity advisor. JCR Settlements enjoys serving as a Gold Sponsor of XPX and looks forward to assisting you and your clients, as appropriate. Please do not hesitate to call or email with any questions or to request an investment illustration. Chad Ettmueller Senior Vice President JCR Settlements, LLC 770-886-7400 cettmueller@jcrsettlements.com
34 OF THE BEST STARTUPS IN THE COUNTRY PRESENTING AT THE ANGEL VENTURE FAIR Date: November 2, 2022 Location: Union League in Philadelphia, Pa Time: 7:30 a.m. to 3 p.m. Food: Continental Breakfast and Deli Lunch
The third annual Virtual Angel Venture Fair featuring 34 companies, chosen by 80 judges, in such industries as biotechnology, consumer product, ecommerce, education, electronics, fintech, food, health care, medias, software and sports will present on Zoom next on the following mornings: June 28, 2022 from 10 a.m. to 1 p.m. EST (One Zoom link is for each day) Virtual Angel Venture Fair (Every attendee will get an electronic book) 27-Jun Presenting Company Presenter 10 a.m. to 10:15 a.m. OXbyEL Technologies, Inc. 10:15 a.m. to 10:30 a.m. Blind Tiger, LLC 10:30 a.m. to 10:45 a.m. Carmell Therapeutics 10:45 a.m. to 11:00 a.m. ChromaTan Inc. 11:15 a.m. to 11:30 a.m. Clarigent Health 11:30 a.m. to 11:45 a.m. Daysheets 11:45 a.m. to 12:00 p.m. DRSLINQ. 12:00 p.m. to 12:15 p.m. Drusolv Therapeutics 12:15 p.m. to 12:30 p.m. Endomedix, Inc. 12:30 p.m. to 12:45 p.m. envoyatHome, Inc. 12:45 p.m. to 1 p.m. Epilogue Systems, Inc 1 p.m. to 1:15 p.m. AeroPest 28-Jun Presenting Company Presenter 10 a.m. to 10:15 a.m. Ethicann Pharmaceuticals Inc., 10:15 a.m. to 10:30 a.m. ExpressCells 10:30 a.m. to 10:45 a.m. GoWell Benefits 10:45 a.m. to 11:00 a.m. iQure Pharma 11:15 a.m. to 11:30 a.m. Martell Diagnostics 11:30 a.m. to 11:45 a.m. Muse Engine 11:45 a.m. to 12:00 p.m. nicklpass 12:00 p.m. to 12:15 p.m. Nollapelli 12:15 p.m. to 12:30 p.m. Nuelehair LLC 12:30 p.m. to 12:45 p.m. Orthoforge, Inc. 12:45 p.m. to 1 p.m. WealthMore 1 p.m. to 1:15 p.m. seekQ 29-Jun Presenting Company Presenter 10 a.m. to 10:15 a.m. Pelex 10:15 a.m. to 10:30 a.m. Pneumeric, Inc. 10:30 a.m. to 10:45 a.m. Praktika.ai Company 10:45 a.m. to 11:00 a.m. Pure Blue Tech Inc. 11:15 a.m. to 11:30 a.m. Score Pharma 11:30 a.m. to 11:45 a.m. Papaya Tutor 11:45 a.m. to 12:00 p.m. Siva Therapeutics, Inc. 12:00 p.m. to 12:15 p.m. SkillMil Inc 12:15 p.m. to 12:30 p.m. Splntellx, Inc. 12:30 p.m. to 12:45 p.m. Vizulingo Inc. 12:45 p.m. to 1 p.m. PCI Global Inc.
Meet one of the world’s top tech investors Guy Pelermuter author of “Present Future” Click here to speak to the author:
Delighted to share an interview I recently conducted on the Commercial Real Estate Shark Eye Podcast. Where I take a deep dive into: My personal story, building my business in the early days on Long Island to developing my relationships in Manhattan. Market trends I’ve witnessed and what I foresee The impact of Global events Tax mitigation strategies I’ve used to preserve client assets The best practices to accumulate wealth How I advise/educate real estate, legal, tax, and business professionals The impact of Section 1031 Exchange on the economy
Great news! Your CPA has informed you, “you will make a lot of money through your real estate portfolio…the bad news, you will have to cut a fat check to the IRS; you’re getting killed on Capital Gains Taxes and Depreciation Recapture.” Sure, you’re familiar with the 1031 Exchange Tax Code. You are at the point in your life where you just want to unload your real estate and get out of the business of “Tenants, Toilet’s, and Trash.” Your really do not want to buy other real estate that will have to be managed in order to satisfy the 1031 Exchange requirements. You do not want to repeat the cycle for the sake of avoiding the tax bill. So, what are you to do? The Delaware Statutory Trust (DST) may be the golden ticket that you are looking for. It permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 Exchange transaction. Key Benefits: No management responsibilities Access to Institutional-Quality property Limited personal liability Lower minimum investments Diversification Estate Planning Insurance policy Eliminate Boot Swap until you drop You can have access to a fully vetted, investment-grade real estate alternative. As a Registered Investment Advisor, not a Broker-Dealer, our process makes for a simple and straightforward 1031 Exchange as well as a less costly one. Now take the trip, make those plans, and do the things you’ve wanted to do. To calculate your property’s replacement value and to view available Investment Grade Properties, visit our site www.investsafeharbor.com *Must be an accredited investor. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Safe Harbor Asset Management, Inc. unless a client service agreement is in place.
By: A.J. Fusco and Sam Shikiar, CFA The price of nearly every consumer good is up, and the dollar is worth less than a few months ago. We are in a time of significant inflation. We feel the impact in everyday purchases, but should we be thinking about our investments and inflation’s impact on them? To help answer this question our friends A.J. Fusco and Sam Shikiar, CFA, of Shikiar Asset Management in New York City, offer guidance on working with investments through these tough economic times. Click
A valuable asset with guaranteed income without paying a dime After reading the headline, you might be asking yourself — “How can I really afford a million-dollar, multi-family property without paying anything?” With the help of Wallace Capital Funding, LLC, one client was able to make it into a reality. However, he first needed to guarantee his own financing so we could then use the Business Funding Analysis (BFA). This client originally owned ten single family homes in the Birmingham area but wanted to own his first multi-family property. The type property of interest was a rarity. With 36 apartment units, the whole property had a HAP Contract, was classified under Section 8 housing, which guaranteed our client would get monthly income directly from the government. It is like buying a business with guaranteed income. Vacancy rates are also much lower for those investing in Section 8 properties. This is because renters are more likely to stay and renew year after year. And in many markets, Section 8 properties attract a long waiting list of interested tenants. We have established how great this opportunity is but how do you get into a property with no money down? The first step is to determine if you and your business can qualify for additional funds using the BFA. If you don’t remember from our last
After a powerful advance last year, the stock market has started 2022 on a down note. Between elevated inflation, heightened volatility and the Federal Reserve’s more hawkish stance, where could markets go from here? If we can’t expect another 20%-plus gain, what can we look forward to? And what kinds of businesses have the right set of traits to help them prosper in today’s environment? Please join me for a strategic discussion covering the markets and some of Capital Group Private Client Services’ perspectives for long-term investors. Click the link below to learn more and register.
The foundation of our practice has always been centered around four guiding principles: access, advice, guidance and service. Today we are excited to announce our expanded team, SageView Partners. Our partnership will not only enhance our resources, but also enrich the experience we offer our clients every day. We are confident our new collaboration will help us serve you better than ever, with comprehensive advice tailored to helping you pursue the goals that matter most to you. We look forward to the opportunity for you to meet our new teammates and invite you to visit our website, where you can learn more about our team. Our team Jeffrey L. Hogue, CFP®, CEPA® Senior Vice President–Wealth Management Wealth Advisor Portfolio Manager 352-745-7443 Team-Announcement-Gainesville-Tampa
We’re welcoming in a New Year and a New Look!
Program produced by Sean Denham is the National Special Purpose Acquisition Company (SPAC) Leader, as well as, the Global and US Services Industry Leader. Locally, Sean is the Office Managing Partner (OMP) for Grant Thornton’s Philadelphia office. As OMP, Sean has the privilege of leading an exceptional team of high-performing individuals in the Philadelphia region who provide top tier accounting, advisory and tax services for our clients. As an audit partner of the firm, Sean serves some of Grant Thornton’s most prominent clients including public and private companies in the professional services industries. Sean is a Certified Public Accountant and earned a Bachelor of Science Degree in Accounting from Lehigh University.
As an advisor, your role is to help clients prepare to exit their business, yet many people resist thinking about the future because it involves so many unknowns, decisions, and choices. And emotions typically complicate matters further, sometimes derailing the process altogether. Here are some questions that can help you establish rapport with your clients, learn more about their concerns, and move the conversation forward. How are you feeling about your work/profession/business these days? Which aspects of work are you still enjoying, and which are you ready to leave behind? Do you envision retiring from work at some point, or are you contemplating an encore career? What part of planning for your future feels most challenging? How do you imagine your life in retirement will be different from how it is now? What process are you using to figure out what you’ll do next after you retire? What would you like to see happen with your business long term? What options have you considered for the transfer of your business? What steps have you taken to make your business more attractive to a potential buyer? What are your concerns about transitioning your firm to new ownership? What would be your ideal scenario for transitioning out of your company? What topic(s) have we touched on today that we should put on our agenda to revisit? So, what happens after you pose a few of these questions and your clients open up about emotional matters? Remember, the most helpful thing you can do is to listen attentively. You’ve created a valuable opportunity for them to talk about things they may not share with other advisors. Here are some tips for managing the conversation when clients raise emotionally loaded topics: Don’t try to “fix things” by immediately offering suggestions. Doing so sends the message that you’re uncomfortable hearing their concern. You can offer suggestions but do so later. Don’t say anything that conveys the message that their feeling or concern is unwarranted. “There’s really no need to feel that way” or “I’m sure it will be just fine” may sound reassuring to you but could be experienced as dismissive by your client. Don’t immediately offer a logical counterpoint to your client’s emotion. Remember, feelings don’t have to make sense; they’re “as is”. Put another way, if feelings made sense, they would be thoughts. People report concerns and characterize their feelings differently from one another, so it’s in your best interest to seek amplification and clarification by inquiring as follows . . . “I want to make sure that I understand exactly what you mean by ___. Can you tell me more?” “People sometimes mean slightly different things when they talk about ___. What does ___ mean for you?” “Before I suggest anything, I’d like to learn more about it from your perspective.” It’s possible that during early conversations your client may hint at mixed feelings about exiting their business. That’s perfectly normal, but you need to bring it out into the open. You want to foster an atmosphere such that your client keeps you apprised about where they’re at. If they keep their ambivalence to themselves, it has greater potential to blindside you and complicate the sale. You can say: “In my experience, it’s normal to have some mixed emotions about selling. Those thoughts may not always be top of mind, but when they do pop up let’s be sure to talk about them. Believe it or not, they can help inform our process and alert us to aspects of the sale that are important to you.” You may also find that your client is overly risk averse. If so, consider saying the following: “Our work together won’t be comprehensive if we only plan for what could go wrong. That’s just half the equation. It’s fine to be conservative and err on the side of caution, but to be truly realistic we should also consider a range of possibilities both good and bad.” Author’s Note: The concepts in this article are derived from Robert Leahy’s book, Overcoming Resistance in Cognitive Therapy. New York: Guilford
For five decades, the southern United States has been an attractive location for automakers to open plants thanks to generous tax breaks and cheaper, non-union labor. However, after decades of failing to unionize automakers in the South, the United Auto Workers dealt a serious blow to that model by winning a landslide union victory at Volkswagen. In an effort to fight back, three southern states have gotten creative: they passed laws barring companies from receiving state grants, loans and tax incentives if the company voluntarily recognizes a union or voluntarily provides unions with employee information. The laws also allow the government to claw back incentive payments after they were made. While these laws are very similar, each law has unique nuances. If you are in an impacted state, you should seek local counsel. In 2023, Tennessee was the first state to pass such a law. This year, Georgia and Alabama followed suit. So why this push? In 2023, the American Legislative Exchange Council (“ALEC”), a nonprofit organization of conservative state legislators and private sector representatives who draft and share model legislation for distribution among state governments, adopted Tennessee’s law as model legislation. In fact, the primary sponsor of Tennessee’s bill was recognized as an ALEC Policy Champion in March 2023. ALEC’s push comes as voluntary recognition of unions gains popularity as an alternative to fighting unions. We recently saw this with the high-profile Ben & Jerry’s voluntary recognition. Will this Southern strategy work to push back against growing union successes? Time will tell. Brody and Associates regularly advises its clients on all labor management issues, including union-related matters, and provides union-free training. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.
Almost since time began, the nimble small business has been axiomatic. Large corporations are like big ships, the common knowledge goes. They take a long time to change direction.
I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships. Pat Riley was a year away from his first of three Coach of the Year awards.
Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of. There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters. For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business. In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product. The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU. Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive. He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.
When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction. This article was originally published by John F. Dini, CBEC, CExP, CEPA on
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