Creative Solutions

GRK&B continually develops creative solutions for tax and business problems, whether they are common or unique. Here are a few examples:

Like It’s Tax Free

A client owned a significantly appreciated piece of real estate in his wholly owned corporation. An unsolicited purchase offer was received and it was considered to be a “once in a lifetime” deal. However, the sale would trigger a taxable event that would generate so much tax at both the corporate and individual levels that the client’s estate value would actually be diminished.

A “like kind” exchange was proposed and suitable replacement property was found. The taxable event was postponed and, upon the death of the owner, the step-up in basis completely cancelled out the tax that would have been generated if the property had been sold when the original offer was made.

Have Your Cake And Share It Too

A not-for-profit organization (NFPO) was anxious to acquire a piece of property (which was the only asset held in an inactive corporation) to house a training program. The NFPO had no funds to purchase the property and was hoping for a donation to kick-start its ambitious project.

Since it was inactive, if the corporation donated the property, the tax deduction would have little or no value. If the property was distributed to the shareholder and then contributed to the NFPO, the same result would occur because the tax-deductible contribution would have been offset by the taxable gain on the distribution.

To solve the dilemma, a valuation of the company was performed and 100% of the stock was donated to the NFPO. The shareholder claimed a charitable contribution for the fair market value of the stock without having to pay any tax on the property’s appreciation and the NFPO gained ownership of the property without a cash outlay.

Be Careful Where You Sign

It’s important to know local law when you are doing business abroad. A U.S. company rendered services in Korea and subsequently found out that it was unable to take the money it had earned out of the country because the contract had been signed in Korea.

After this unsettling discovery was made, GRK&B was contacted to help find a solution. The Vancouver affiliate of JHI had a client with ongoing business in Korea and arrangements were made to sell the contract for 95 cents on the dollar, allowing the U.S. company to receive most of its money.