Tim Parsons asked 2 years ago
I’ve been listening to the podcast for a while, which is always fun to hear Mark try to describe what he is drawing on his whiteboard like some kind of weird Pictionary game. Luckily the answer is usually a self directed IRA… I digress…
I have an opportunity to buy a business in my space at an incredible price. I was originally going to do it with a partner, but then I thought- not with a partner would be better! The purchase price requires 10% down, $150,000. I have 75,000 liquid that my more intelligent half is comfortable investing in the deal. The next 75k is where it gets dicey. The banker mentioned the ROBS strategy. It all sounds good in theory, but one plausible exit plan is to sell this business with my existing business as a packaged deal. With the ROBS portion being in a C corp would that force a sale into a sale of shares instead of an asset sale? Also, the tax on an exit as an asset sale would be mostly capital gains, not ordinary income (keep it simple). Doing this ROBS strategy would defer the capital gains tax, but then wouldn’t it be taxes as ordinary income when it gets pulled out in retirement? Let’s not be silly, I will be pulling it out in retirement and living large. None of this smaller tax bracket nonsense. It seems it would be better to pay capital gains now rather then ordinary income tax later.
Sorry for all the jokes, you guys are funny on your own, you don’t need me. (I heard it is better to be complementary to get your question answered on the air).