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How the 1031 Exchange and Other Tax Reform Measures Can Benefit Small Business

Tax reforms can be very beneficial to businesses. For example, the 1031 exchange is a tax reform that can benefit businesses of any size. The fact is that small businesses can really suffer when they end up paying excessive capital gains taxes. In a 1031 exchange, a small business owner can take the money from the sale of a business asset and reinvest the profit into another asset without having to pay too much in capital gains taxes. It is in this way that tax reforms like the 1031 exchange are good examples of useful tax reforms that can help businesses stay solvent.

There are several ways that a 2031 exchange may be able to benefit your business. The 1031 exchange will allow you to upgrade your business assets without having to face negative tax consequences. This allows small business owners especially to leverage their current property to build great wealth without having to give most of it up in tax payments.

Business owners are wondering how the 1031 exchange can actually work for them. In a 1031 exchange, an investor can in effect take the equity from one business property and use it to purchase another 1031 exchange replacement property. In a successful 1031 exchange, the replacement property will have to be of the same ‘like and kind’ as the property that you originally sold. To satisfy the 1031 exchange the new property must be in the same ‘like or kind’ as the original asset, which means that the purchase of the new asset will be seen legally as a continuation of the first investment. What this means is that, the taxes will not come due for the sale of the first asset until the replacement asset has been sold.
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When you are a taxpayer in our system, you are likely to view paying capital gains taxes as cumbersome and even unnecessary. Through tax reforms like the 1031 exchange, businesses of all sizes will be able to defer their tax bills and ultimately benefit.
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Small business owners who are unfamiliar with or do not understand tax reforms like the 1031 exchange can still benefit from them. In cases like these, it is always best to contact a 1031 exchange intermediary. 1031 exchange intermediaries are advisors who have a thorough understanding of the tax reforms and how business owners can use them to benefit. To learn more about the ways that tax reforms can benefit business, all you have to do is perform a search engine search for a 1031 exchange intermediary or simply look for more information about helpful tax reforms.