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...ake business decisions, from filing tax returns to selling the interest in the...Have some been structured to be income tax free (insurance payments may be)? ...

...me statements, balance sheets, and tax returns. Buyers will look at top-line ...potential buyers. THE BOTTOM LINE Preparation is essential to maximizing the...

...ments for any agency, valuation and tax issues, shareholder internal buy/sell ... cash flow, terms affect both risk and taxes for both sides.   Win/Win N...

... him if he becomes disabled. An agency's book of business can be decimated if an agent dies or becomes disabled and no provision has been made to protect it. I have had the experience of trying to arrange for the rapid sale of a deceased agent's book, and it is not a happy situation to be in if no preparations have been made. In selling the agency, the 1993 Clinton tax law changes make good will and expirations deductible to the buyer, but extend the time for amortizing covenants, expirations and good will to 15 years. Tax rate changes have raised maximum federal ordinary income tax rates to $39.6%, while leaving the maximum capital gains rate at 28% . Existing plans for agency sales should be re-examined to see how they are affected by these changes. Deferring ... a durable power of attorney in place to permit someone to act for him if he becomes disabled. An agency's book of business can be decimated if an agent dies or becomes disabled and no provision has been made to protect it. I have had the experience of trying to arrange for the rapid sale of a deceased agent's book, and it is not a happy situation to be in if no preparations have been made. In selling the agency, the 1993 Clinton tax law changes make good will and expirations deductible to the buyer, but extend the time for amortizing covenants, expirations and good will to 15 years. Tax rate changes have raised maximum federal ordinary income tax rates to $39.6%, while leaving the maximum capital gains rate at 28% . Existing plans for agency sales should ...

... willing to finance the purchase of their interests? Does third-party financing make sense, and have you arranged for it well in advance? What financial resources does the next generation of owners have? Do you plan to use the agency's future cash flows to repurchase stock from departing shareholders? If so, have cash flow projections been prepared that validate the viability of this plan? The transfer mechanism and resulting tax consequences to buyers and sellers. As they say, The devil's in the details. Getting the price right is only half the battle. The structure of the deal must also support the objectives of the involved parties. Careful consideration must be given to the mechanics of the ownership transfer so that the tax liabilities can be minimized for both buyer and seller. A transfer of ownership can be structured in ... . Do you have a written plan in place to transfer the ownership of your agency in an orderly fashion and at a reasonable price when you decide to move on? If not, your likelihood of perpetuation success is greatly reduced. For many agency owners, their insurance agencies are their largest single asset-so it's surprising that they don't give more attention to protecting and maximizing this investment. If not properly prepared for, the transfer of ownership can be frustrating and disappointing. Unless options and objectives are evaluated well in advance (we recommend beginning perpetuation planning at least five to seven years before the actual transfer), you probably won't be able to accomplish all your desired objectives, and the departing owner(s ) will be disappointed with the results. Simply put, if you wait until the last ...

...ales or receipts. Be sure the sales tax that you remit separately is not incl...

...elling the agency, the 1993 Clinton tax law changes make good will and expirat...wills or trusts that take advantage of tax saving opportunities in the death tax laws. Another device is to channel ...

... as administration, accounting, and taxes. SELLER'S ADVANTAGES: Elimin...der other factors, such as accelerated tax issues, the value of cash, and pay-...

...he transfer mechanism and resulting tax consequences to buyers and sellers. As..., and so on). These all have different tax implications to understand and acco...

... buyers and sellers of agencies. In the typical sale or transfer of an agency, the interests of the buyer and seller differ. The buyer is concerned with being able to make the payments from earnings of the business, with as little down as possible. He typically wants to be able to depreciate as many of the assets he acquires over as short a time as possible, to reduce the tax cost of the acquisition. He also wants to avoid liabilities of the acquired business, such as errors & omissions exposure. The seller may wish to defer tax from the sale. He normally wants as much of a down payment as possible. He typically would prefer to have capital gains treatment for the gain from the sale of the business, rather than ordinary income treatment, if he will ... and enable a basis step-up), or (b ) having the sale or other transfer triggered by or after death (and after the agency interest is stepped up in basis) . 5.3 Commission splits after retirement or leaving agency. The parties sometimes agree to continue commission splits for a period of time after a producer retires or leaves the agency, with the agency owning the new expirations information it prepares for no additional payment. This approach is primarily used in two circumstances. One circumstance occurs when a retiring producer owns his expirations. Another circumstance occurs when a producer is given deferred commissions in the business he produces for the agency, but not an equity interest in the expirations or the agency. If successful, this approach will make the commission split payments to the departing producer excludable from agency ...