Business Building Estate Question


S

Steve Buck

Background Info:

Me (son 43) - Owns widget business outright. Parents gifted
business to me over 5 years. Parents also gifted to sister
money to make it fair. Widget business pays $3000.00 a
month NNN to parents to stay in building. Ends up to be
$5000 a month after taxes, insurance. (Rent is below market
value. Market value is probably $6000.00 a month NNN)

Sister (40) - nothing to do with business. Married with husband in AZ.

Parents - 72 & 75. Both good health.
Assets - 1,000,000 stocks.
House - owned - value $750,000
Business Building - fully depreciated. Owned outright. Value - $1,000,000

Issues - Building too large for my widget business. I want
to rent half of building out to another tenant. Parents do
not want another tenant. Do not want to build another
bathroom etc. Too much hassle for them at this age. Parents
leaning to kick me out and sell building.

Estate Planning - Parents stopped gifting after business transferred.

Widget Business- Can only afford a $300,000-$500,000 building.

Can someone comment on the following scenario:

1. Parents sell building for 1,000,000 cash. $800,000
capital gain. 30% tax after everything. Parents pay
$240,000 to Uncle Sam. Then this money starts earning
interest for the future estate. Is this a prudent thing to
do?

2. Parents transfer 100% ownership to building to me and my
sister. I pay $500,000 to sister over time with a note. I
rent out half of building because I own it now. Is this a
prudent thing to do for estate purposes for my parents.

3. Parents sell me building at reduced rate. Write in will
my sister gets house on death.

We just have accountant giving options now. Does this seem
like a scenario where we should get estate professionals to
give options. Is estate taxes an issue with this scenario.

If one of my parents dies is the estate tax threshold 1.5
million or 3 million if other parent dies?
 
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