Ep. 95 | The Hidden Benefits of Deferred Sales Trusts for Real Estate Investors

Teaching Tax Flow: The Podcast

About the Guest:

Todd Jackson: Todd Jackson is a highly experienced tax attorney, M&A advisor, and real estate attorney based in Franklin, Tennessee. Known for his expertise in Deferred Sales Trusts (DSTs), 1031 exchanges, and complex tax planning strategies, Todd has worked closely with clients to help them minimize tax liabilities on large capital gains. He is also a licensed real estate agent and title insurance agent, showcasing his diverse skill set in the financial and legal sectors.

Episode Summary:

In this episode of the Teaching Tax Flow podcast, hosts John and Chris are joined by special guest Todd Jackson to explore the intricacies of Deferred Sales Trusts (DSTs). As Episode 95 counts down to their milestone 100th episode, the team delves into how DSTs can empower and educate high-income earners, real estate investors, and successful entrepreneurs to legally and ethically minimize taxes paid over their lifetime.

Todd Jackson provides a thorough comparison between DSTs and 1031 exchanges, highlighting the flexibility and control DSTs offer in deferring capital gains. This episode demystifies the concept of installment sales and explains how DSTs can alleviate some of the stringent requirements of 1031 exchanges, such as debt replacement and time constraints. With practical examples and insightful explanations, Todd emphasizes the significant tax planning benefits DSTs provide.

Key Takeaways:

• A Deferred Sales Trust (DST) is a powerful tool for deferring capital gains taxes using installment sale treatment.
• DSTs provide more flexibility and fewer restrictions compared to 1031 exchanges, particularly regarding replacement debt and investment options.
• It's essential to have the DST structure in place before any sale occurs to avoid triggering taxable events.
• The minimum capital gain for considering a DST is generally around $500,000 to justify the structure's complexity and cost.
• Timing and control are critical components of a DST, allowing the deferral of income recognition over several years while preserving and growing the trust's assets.

Notable Quotes:

1. "My phone usually rings when somebody's selling something and facing a capital gain." - Todd Jackson
2. "Would you rather pay something today or ten years from now? Most people are going to say they'd prefer to pay it later." - Todd Jackson
3. "We have to create this and maintain it in a way that prevents you from having a constructive receipt to where that triggers all the gains." - Todd Jackson
4. "The relationship between the trust and you as the seller is that of an installment sale, which is borrower and lender." - Todd Jackson
5. "DSTs can invest in anything. The conversation is more about what it should invest in, based on risk tolerance and preservation strategy." - Todd Jackson

Resources:

• Todd Jackson Law: Website

Join us next week for another insightful episode of the Teaching Tax Flow podcast, where we continue to bring you expert advice and actionable strategies to optimize your tax planning. Don't miss the countdown to our 100th episode!

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Episode Sponsor:
Strategic Associates, LLC
Roger Roundy
www.linkedin.com/in/roger-roundy-86887b23

• (00:04) - Deferred Sales Trusts and Year-End Tax Planning Strategies
• (04:55) - Deferring Capital Gains Taxes Through Installment Sales
• (09:56) - Choosing Flight Times and Recognizing Income
• (10:49) - Comparing 1031 Exchanges and Deferred Sales Trusts
• (16:20) - Deferring Capital Gains Through Installment Sales and Trusts
• (21:25) - Deferred Sales Trusts for Large Capital Gains
• (26:00) - Fun Questions and Career Insights with Todd Jackson