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How Your Business Can Benefit From Tax Reform

Tax reforms can be very beneficial to businesses. For example, the 1031 exchange is a tax reform that can benefit businesses of any size. When a small business pays out a great deal in capital gains taxes it could end up hurting the business. In a 1031 exchange, a small business owner can take the money from the sale of a business asset and reinvest the profit into another asset without having to pay too much in capital gains taxes. In this way, a 1031 exchange is a good example of a useful and important tax reform that can help many businesses.

Your business may benefit from a 2031 exchange and other tax reforms in a number of ways. When you use a 1031 exchange you will actually be able to defer the tax consequences of the sale of a business asset to a future time. This allows small business owners especially to leverage their current property to build great wealth without having to give most of it up in tax payments.

Many small business owners who are unfamiliar with this tax reform wonder how it could possibly work. In a 1031 exchange, an investor can in effect take the equity from one business property and use it to purchase another 1031 exchange replacement property. In a successful 1031 exchange, the replacement property will have to be of the same ‘like and kind’ as the property that you originally 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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When you are a taxpayer in our system, you are likely to view paying capital gains taxes as cumbersome and even unnecessary. When you use tax reforms like the 1031 exchange you can count on it helping your business a great deal, especially if you are a real estate investor or building landlord.
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Small business owners who are unfamiliar with or do not understand tax reforms like the 1031 exchange can still benefit from them. 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. To learn more about the ways that tax reforms can benefit business, all you have to do is perform a search engine search for a 1031 exchange intermediary or simply look for more information about helpful tax reforms.