Pub. 1 2020 Issue 1

24 Kentucky Trucker Kentucky Trucking Association were significantly less likely than their employees to have pension or retirement plans, including 401(k)s on their current jobs. “An owner might be maxing out a 401k and IRA, but the rest of his cash goes into supporting his lifestyle and the company … so, the problem gets bigger — they just haven’t effectively diversified their wealth .” Many of our clients are facing this dilemma right now. Their businesses are performing better in 2019 than they have in years (in some cases as far back as 2007), and the notion of selling now is being paired off against the idea that the business may be worth even more in five years. Why doesn’t that make sense? First, you have most (if not all) of your life savings tied up in a highly illiquid asset. That places you at tremendous risk from both an economic standpoint (how many businesses failed during the last recession?) and from a personal stand- point (disease, death, and divorce are just some of the big Ds you are facing). In addition, we have found a large segment of the next generation wants nothing to do with ownership in the business after having experi- enced their parents 24/7 commitment. During a business transfer, some of the issues you need to consider are: • How to acquire fair market value from my business. Remember, you are selling a revenue stream in addition to your hard assets. This is often overlooked. • Capital gains taxes at federal/state rates can be as high as 30%. These taxes in some scenarios can be eliminated or deferred. • The recapture tax of IRS section 179 and acceler- ated depreciation deductions at ordinary tax rates can be devastating! • Key successor management needs to be identified and in place. If not, business failure typically follows. Your first major step is to begin the planning process. This typically takes a minimum of two years. Get Your House in Order Is my financial house and back room in order. Do I have a history of financial documents? Will they continued from page 22 Medley’s Auto and Truck Repair Service Inc. COMPLETE TRUCK & TRAILER ALIGNMENTS TRACKING & TRAM D.O.T. INSPECTIONS U-BOLTS STEERING REPAIRS FRAME ALTERATIONS TRUCK FABRICATIONS LEAF & AIR SPRINGS AIR RIDE SUSPENSION ANY SUSPENSION REPAIRS FIFTH WHEEL WHEEL BALANCING/ TIRE REPLACEMENT DRIVE AXEL REPAIRS & REPLACEMENT 3913 Shepherdsville Road • Louisvile, KY 40218 • 502-459-5740 Email us at quote@medleystruck.com • Visit us at medleystruck.com At Medley’s Truck, we get you back up and running.