Concentrated Stock Comprehensive Guide eBook PDF version - Page 10

Tax Benefits of a CRT:

A CRT is the “go-to” tax mitigation technique for those with concentrated stock positions – even more so in a world where Long- Term Capital Gains rates are rising. Use a CRT to sell highly appreciated assets tax efficiently – CRTs are not necessarily just for those who want to be charitable.

For example, with a $1 million transfer of highly appreciated stock to a CRT:

The CRT can sell the highly appreciated stock with no upfront tax cost (federal and state).

Your $1 million is re-invested immediately in a balanced portfolio.

If shares are sold without a CRT, only the post-tax amount gets invested.

Without a CRT, taxes would take over 40% of your proceeds.

You receive an annual distribution from the CRT for the rest of your life (or the CRT term).

You only pay tax as you receive the distributions from the CRT. The distributions will be rich in capital gains and qualified dividends.

You get a tax deduction of $100K in the year of transfer, subject to AGI limit of 30%.

The transfers to the CRT assets are outside your taxable estate.

Because you participate in the growth of the CRT assets, the CRT represents a hedge against inflation.

2. Establish Your Legacy

Charitable Remainder Trust (CRT)

10