Tax planning, carried interest, Trust?
I’ve recently started working at a small family owned manufacturing company.
This company’s even smaller subsidiary has about an 60-80% chance of winning a massive generationally life changing contract.
As I’m the finance guy (scary right) here’s the question:
Is it remotely feasible to spin up a Investment Management entity relatively quickly sell the company to it (same owners), throw in a hurdle rate and effectively allow the family to take advantage of the Carried Interest loophole assuming the sub is a S-Corp.
And if this is insane is sending all the profits into a Trust an option? I'm trying to think of other ways they could minimize taxes, buy a trucking fleet etc., any ideas?
I could go on but you get the gist.
THANKS!
I'm a moron, like I guess the dad would have to be the lone LP and the kids the managers?
Buying a fleet is using the code to reduce tax liability.
The other sounds like tax evasion. Definitely consult a lawyer so you don’t end up in jail.
I’ve come to learn that if your tax strategy is not common, it’s probably not advisable.
Trusts don’t reduce taxes at all on income. Trust tax rates are brutal, 39.6% after less than $15k of income. Trusts avoid taxes by distributing income to beneficiaries, which would be taxed at their own rates.
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