No Gain, No Pain: Creative Tax Strategies Using Qualified Small Business Stock (QSBS), Like-Kind Exchanges and Even Opportunity Zones
The dream of every tax planner is to make taxable income magically (and legally) disappear – a kind of tax prestidigitation that, for the most part, is impossible to pull out of a hat these days, especially under the watchful eyes of the Internal Revenue Service and the Internal Revenue Code.
Since 1986, the potent combination of the alternative minimum tax rules, the passive activity loss rules, the enhanced at-risk rules and other “anti-abuse” provisions of the Code have pretty much slammed the door on “tax shelters” and have made it difficult to avoid recognizing and reporting economic gains when they are realized.
However, thanks to the remarkable interaction of three key Code provisions, there are now creative and unprecedentedly attractive tax planning strategies that promise to bring the magic back to income tax planning. Separately, but especially in tandem, these Code sections authorize taxpayers to create entirely legal arrangements – dare we say “tax shelters” – that can make capital gains literally disappear.
This program addressed:
- How QSBS allows a taxpayer to exclude up to $10 million of capital gain (and sometimes more)
- Situations where choosing C corporation status (and therefore QSBS eligibility) makes more sense than traditional pass-through tax structures
- How to multiply the $10 million QSBS exclusion by making gifts and transfers in trust
- How to use like-kind exchanges (LKEs) most effectively in 2019
- Combining QSBS and LKE strategies with the use of Qualified Opportunity Funds (QOFs) to maximize after-tax investment benefits.
Our distinguished panel discussed and addressed each of these three tax strategies separately, and then explained how they can be used in combination to achieve truly amazing tax results.
Joseph B. Darby III, Sullivan & Worcester
Christina Rice, Director of the Boston University Graduate Tax Program
David Gorenberg, Wilmington Trust 1031 Exchange
Mike Hough, Andersen Tax