DST Scenarios & Case Studies
Approximate Tax Due:
Total Tax Due:
$6,770,000
VS
Deferred Sales Trust™:
$0
Congrats, You Saved:
$6,770,000
Hypothetical Scenario 1:
Commercial Property Sale in NYC
- Sales proceeds after commissions and closing costs: $20,000,000
- Seller’s Original Basis: $5,000,000
- Capital Improvements: $1,000,000
- Depreciation: $4,000,000
- Mortgage Balance at time of closing: $2,000,000
* Purchase price + capital improvements – depreciation - Seller’s adjusted basis: $2,000,000
* Net sales proceeds minus adjusted basis - Taxable gain: $18,000,000
- Federal Tax 20-25% – Unrecaptured section 1250 gain applies
- NY State & City Tax 12.7%
- Medicare Tax 3.8%
Hypothetical Scenario 2:
Primary Residence in Los Angeles
Mr. and Mrs. Taxpayer want to sell the highly appreciated residential property in California that they have lived in for ten years:
- Sales proceeds after commissions and closing costs: $4,000,000
- Seller’s Original Basis: $400,000
- Mortgage Balance at time of closing: 300,000
- IRC sec.121 exclusion: $500,000
* Purchase price + section 121 exclusion - Seller’s adjusted basis: $900,000
* Net sales proceeds minus adjusted basis - Taxable gain: $3,100,000
- Federal Tax 20%
- CA State Tax 13.3%
- Medicare Tax 3.8%
Approximate Tax Due:
Total Tax Due:
$1,150,100
VS
Deferred Sales Trust™:
$0
Congrats, You Saved:
$1,150,100
Approximate Tax Due:
Total Tax Due:
$2,495,000
VS
DST™ with MOB:
$62,375
Congrats, You Saved:
$2,432,625
* Mortgage Over Basis (MOB) is taxable = $250k is nondeferrable.
Hypothetical Scenario 3:
Business in Chicago
- Sales proceeds after commissions and closing costs: $10,000,000
- Seller’s Original Basis: $0
- Business Loan balance at time of closing: $250,000
* Net sales proceeds minus adjusted basis - Taxable gain: $10,000,000
- Federal Tax 20%
- Illinois State Tax 4.95%
* Doesn’t apply to this situation - Medicare Tax 3.8%
* Net sales proceeds minus adjusted basis - Taxable gain: $18,000,000
- Medicare Tax 3.8%
Meet Our Team
James J. Flick
Senior Attorney
James M. Flick
Attorney
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