Private Annuity

Private Annuity

By: Martin M. Shenkman, CPA, MBA, JD

Selling a business to your heirs in exchange for a private annuity has been a popular estate and retirement planning technique. You could freeze the value of your business, sell it to an heir active in the business, have an annuity for the rest of your life, report income as you received the annuity rather than immediately, and more. The IRS proposed new regulations Reg-141901-05 10/18/06 ruining the party by requiring you to recognize the gain immediately. The upside is that these rules are, so far, only proposed, so right now they provide a slight window of opportunity. If you’re contemplating such a sale, you had better move quickly.

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