How to Recapitalize as a Corporation

There are plans to protect your major stock assets from maximum taxation upon your death. Making gifts of stocks is just one way to protect your estate from taxation. Recapitalizing as a corporation can help minimize tax consequences in your portfolio. Read on to learn how to recapitalize as a corporation.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Stocks
• Corporation
• Attorney
• Financial adviser

1. Learn about recapitalization and its tax-free advantages. The assumption that all recapitalization is tax-free is incorrect.
2. Create a restructure plan with your attorney and financial adviser.
3. Consult with your business partners and decide whom you want to bring into the company. Calculate the strength of your business reputation. Many times new names on the letterhead hurt a business.
4. Select the assets you want to bring to the new corporation. This is an opportunity to leave bad employees and investments.
5. Unite key employees with recapitalization. Retention makes a company stronger.
6. Study the tax law and decide the best path for your company. A family-owned business is has its risks, but it also has tax benefits. Heirs of a family-owned business can take advantage of extra tax deductions.
7. Complete recapitalization by incorporating stock with family-oriented entities like a family trust or limited liability companies.

Tips & Warnings

• You can utilize tax-free recapitalizations several times in one year.
• Hire a knowledgeable account.
• Be careful of estate tax freezes they can call the attention of the IRS.
• Do not assume that you are limited because ownership of a corporation.