A better way....?

[jdunc31]

I recently took my long awaited buy out and have dropped out of the corporate world!

My question is this--with taking the stock buyout that has generated some pretty big potential long term capital gains taxes for this coming year.

I would like to purchase a commercial property for my side hustle business and wonder if there are any potential tax advantages towards taking the stock buyout cash and then using it to purchase the commercial property? Would doing that offset some of the tax bill or is there not really a way around this large tax bill coming due...?

 

[Koolau]

I'd be looking at whether there is any potential for an exchange (1031 or 1035, etc.). Probably not, but any "cash" sort of settlement likely would trigger a fully taxable event (no LTCG either I suspect).
Congratulations on becoming a "drop out." But call it FIRE'd. It sounds better.

 

[Flyfish1]

I'm not sure how buying a commercial property is going to offset any LTCG from the stock buyout. I guess the good news is your buy out should be considered LTCG , not regular income. Pay the tax , buy the building and then down the road you could 1031 into something else perhaps.
Congrats!

 

[Jerry1]

No tax help here, but congratulations on being retired.

 

[VanWinkle]

I recently took my long awaited buy out and have dropped out of the corporate world!

My question is this--with taking the stock buyout that has generated some pretty big potential long term capital gains taxes for this coming year.

I would like to purchase a commercial property for my side hustle business and wonder if there are any potential tax advantages towards taking the stock buyout cash and then using it to purchase the commercial property? Would doing that offset some of the tax bill or is there not really a way around this large tax bill coming due...?

Some areas are designated for tax relief when investing in new business. This is the only avenue for possible tax savings I can think of. You may have one of these areas close to you and can be checked with local government for possible tax breaks.

 

[jdunc31]

Thanks for the congrats and well wishes---I will go ahead and transition to the "FIRE" designation!

In regards to the tax situation, what I understand is that since the stock options were all held for longer then 2 years then it at least is considered "long term" but would still like to find a way to take the proceeds and Invest in the next thing with some offset...??

 

[luckydude]

Thanks for the congrats and well wishes---I will go ahead and transition to the "FIRE" designation!

In regards to the tax situation, what I understand is that since the stock options were all held for longer then 2 years then it at least is considered "long term" but would still like to find a way to take the proceeds and Invest in the next thing with some offset...??

Here's a link to Investopedia on 1031 exchange:

What Is a 1031 Exchange? Know the Rules

A 1031 exchange allows real estate investors to swap one investment property for another and defer capital gains taxes, but only if IRS rules are met.

www.investopedia.com

1031 only works for real estate investment and not for capital gains from sale of stocks. There are probably other ways to defer cap gains (I am not a tax pro), but doing a 1031 exchange isn't one of them.