Ways to Reduce or Eliminate the Tax on Crypto Gains
Currently, in the market, there are massive crypto gains and there are people who are actively selling their crypto businesses. With so many changes in the crypto market, one of the most common questions asked is, how can one avoid paying tax on the money that they get by selling their crypto portfolio?
There is indeed a legal way in which this can be done. A very special strategy called DST can be used if you ever find yourself in such a situation. DST stands for Deferred Sales Trust and you will be learning more about this in this article.
Who Can Opt for the DST Tax Strategy?
DST strategy can be useful when the gain on sale is greater than $500,000. You may be selling your crypto portfolio, or you may even be selling your real estate portfolio or business. Irrespective of what you are selling, if the total gain on sales is greater than $500,000 you can use the DST strategy to avoid paying tax on the selling amount.
The Need for a Tax-Saving Strategy
Since Covid has happened, the government is talking about raising the long-term capital gain rates. Biden in his proposal stated that they are working on raising the long-term capital gain rate for anyone that makes a million dollars or more to 39.6% which is the highest individual income tax rate. This is actually a serious problem!
For instance, imagine that you have a business that you’ve built over the last 20 or 30 years. The surge in Covid cases has brought down your sales and you are thinking about retiring by selling your business. If you are in a similar situation, it would be helpful to note that your long-term capital gain on your business is 40% at the federal level. This rate is 62% if you are living in California or New York. If the situation described above seems similar to you, the thought of giving away 62% of the money you get by selling your business, may seem repulsive to you.
How Does DST work?
The DST tax strategy does not mean bypassing the tax system but it is a tax deferral. The best part about this is that you can defer the tax for up to a lifetime, including going into the next generation. Basically, here you are selling your asset to DST and DST will then sell it further to the final buyer. Since there is a middleman here, you will have to pay a fee to the middleman. Here we are looking at about one and a half percent to set it up and one and a half percent per year to have the DST. This is way better than paying 62% of the selling amount to the government.
The solution to Your Problems
Tax Goddess thrives in bringing helpful tax strategies to help you out in situations like the one described above. If you are selling something big, like your crypto portfolio, your business, or a real estate portfolio, and the gains are over the $500,000 mark, a DST tax strategy can be helpful for you.
At Tax Goddess, we would go over different tax strategies with you and recommend a strategy that is best suited for your situation. If you are looking to protect as much of your money as possible, the DST might be a great strategy for you.
Tax Goddess works with six, seven, and eight plus entrepreneurs. We recently just closed a $20 million crypto case using the DST tax strategy. Now that particular client is able to fund charity, which was his big push on things he wanted to do. This shows that Tax Goddess can not only help you save taxes but can also help you meet your goals. We would love to help you reach your goals and keep all that saved tax money in your pocket.
You can check out the full webinar on DST by navigating to www.dst4me.com. If you have any questions with regards to this, you can reach out to us at us@taxgoddess.com.
