How Your Business Can Benefit From Tax Reform There are many ways that tax reform measures can benefit your business. One example of a tax reform that can help your business is the 1031 exchange. When a small business pays out a great deal in capital gains taxes it could end up hurting the business. 1031 exchanges allow business owners to take the profits from the sale of a particular asset and reinvest those profits into another asset without having to pay taxes on the sale. It is in this way that tax reforms like the 1031 exchange are good examples of useful tax reforms that can help businesses stay solvent. There are several ways that you can expect your business to benefit from a 1031 exchange. When you sell a particular business asset, the 1031 exchange will allow you to defer the tax consequences of the sale to another time in the future. A 1031 exchange will actually let your company sell a business asset and defer the taxes on the sale of that asset to be able reinvest in their company by purchasing another asset. There are many small business owners who have never heard of the 1031 exchange before wondering exactly how it works. This will allow a business owner to take the equity they have gained in their company infrastructure and put it back into their business without incurring a tax bill. In the 1031 exchange tax reform, the 1031 replacement property must be a business property that is of the same type as the properties that had been sold. If the new property is of the same type as the original property, under the 1031 exchange provision the investment in the new asset will be legally regarded as a continuation of the original asset. The taxes therefore, for the sale of the older properties will not be due until the new asset has been sold.
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There are many business owners who view paying taxes on capital gains as completely unnecessary. Through tax reforms like the 1031 exchange, businesses of all sizes will be able to defer their tax bills and ultimately benefit.
Understanding Taxes
Even if you are a small business owner who does not understand how the 1031 exchange works, you can still benefit from it. If this is the case, and you are unsure how to proceed in a 1031 exchange, the best thing you can do is get in touch with a 1031 exchange intermediary. 1031 exchange intermediaries are advisors who have a thorough understanding of the tax reforms and how business owners can use them to benefit. If you want to find out more about how your business will benefit from tax reforms all you have to do it search the web for information about the 2031 exchange and other important tax reform measures.