Capital gains taxes stand to take a big chunk out of your profits when you sell an asset. However, like most taxes, there are many things that go into the exact calculations of the capital gains tax you will pay. Remember that capital gains tax applies to a variety of different assets, including stocks, property and businesses. A unique factor of capital gains tax is that the amount of tax depends heavily on how long you had the asset. Depending on the state you live in, the state government may also levy capital gains taxes in addition to the federal government.
The deferred sales trust (DST) is a tax strategy that builds on the installment sale concept explained and regulated by Section 453 of the Internal Revenue Code. For nearly a century, this process has provided sellers with capital gains tax relief if they do not receive full payment for an asset at the time of the sale.
It’s important for you to understand what the word “estate” means so that you do not underestimate the broad scope of the term. The “estate” consists of all the property a person owns or controls. Examples of the more well-known items include personal property, real estate, bank accounts, insurance policies, business interests, certain trust accounts and debts, just to name a few.
Estate planning is an important part of your overall wealth management strategy, especially if you’re unmarried. Single parents may worry about who will care for their minor children and whether their surviving kids’ financial needs will be met until adulthood. Likewise, wealthy single people have less flexibility when it comes to shielding transfers from gift and estate taxes.