Thursday, December 26, 2019

The Effect of World Agribusiness Trade on Arizona, or American Southwest Free Essay Example, 5000 words

GDP in agriculture in Arizona and other states as of 2006 Primary agriculture –livestock and crop production State Billion Dollars Percentage of industries GDP in State Arizona 1.21 0.5 Colorado 1.41 0.6 Florida 3.86 0.5 Texas 6.09 0.6 California 15.13 0.9 Kansas 2.44 2.2 Nebraska 3.66 4.9 Iowa 4.9 4.1 U. S 95.78 0.7 Statistics for the gross value added concept GDP is the only basis with comparable data. The table below shows that as of 2007, the Agricultural Census showed that 15,637 farms and ranches in Arizona utilized over 26 million acres of farm and ranch land. We will write a custom essay sample on The Effect of World Agribusiness Trade on Arizona, or American Southwest or any topic specifically for you Only $17.96 $11.86/pageorder now Apparently, it is over one-third of the total area of Arizona, and, also, an implication that the recorded farms are significantly higher than previous years. The average area farmed by specialty as recorded in the table entail that crop farm is one-fourth of the average for all plant production. The average for livestock farms is about 2,200 acres which is influenced by large cattle ranches (Moss et al. , 2012, 16-18). Therefore, the table indicates that international agribusiness and trade related issues in Arizona are improving in a positive perspective. Structural Data for Agriculture in Arizona as of 2007 Agriculture as a whole specialty Farm type All Livestock Plants Crops Number of farms 15,637 11,235 4,402 3,116 Land in farms, 1000 acres 26,118 24,526 1,590 282 Acres per farm 1,670 2,183 361 90 Source: Based on the 2007 agricultural census As per the table below, the 2012 Census of Agriculture has more than 20,000 farms and ranches spanning across the state of Arizona. The table entails that farmers and ranchers are the main managers of Arizona’s lands, where cropland and grazing land represents roughly three-quarters of the state’s land region. The North American Industry Classification System (NAICS) identifies farms by the commodity that they specialize in. The table also entails that the most prevalent type of agricultural operation in Arizona is operations specialized in animal aquaculture and other animal production. Thus, the effect of international agribusiness and trade related issues in Arizona have been affected in a positive point of view. Number of Farms in Arizona by Farm Type, 2012 Type of farm by NAICS Number of Farms Oilseed and grain farming 718 Vegetable and melon farming 1,625 Fruit and nut farming 877 Greenhouse, nursery and floriculture production 400 Cotton 195 Hay and other crops 1,294 All crop farms 5,109 Beef cattle ranching and farming and feedlots 4,215 Dairy cattle and milk production 102 Hog and pig farming 213 Poultry and egg production 267 Sheep and goat farming 4,593 Animal aquaculture and other animal production 5,506 All livestock farms 14,896 All Farms 20,005 Source: USDA, 2014, 2012 census of Agriculture-Arizona and County data.

Wednesday, December 18, 2019

The Carpe Diem Poetry By Andrew Marvell Essay - 1773 Words

The Carpe Diem Poetry was more common during the Renaissance period and it urged people to acknowledge the swiftness of time and how imperative it was to make good use of opportunities. In fact, a number of poets used the style in creating the various themes such as death, life, time and sexuality. More importantly, some of the poems even adopted the sexual innuendos as a way of looking at the sexuality indirectly. For instance, the poem â€Å"To His Coy Mistress† by Andrew Marvell reveals multiple themes that insist that people should use their time effectively. More specifically, it illustrates mortality and how death is inevitable, insisting individuals should enjoy the pleasures the world offers, especially sex. Robert Herrick’s â€Å"To the Virgins, to Make Much of Time† also insists that virgins should use their time well and ensure that death does not end any plans they had. John Donne’s â€Å"The Flea† uses the image of a flea and the mixing of blood and fluids to persuade a girl into having sex. Even â€Å"The Passionate Shepherd to His Love† by Christopher Marlowe captures the theme of Carpe Diem, which insists on the swift passage of time and the need to use every opportunity effectively. All in all, the four poems use sexual innuendos to help in reducing the derogatory nature of such poems. Instead, the imagery used help in addressing sexuality indirectly, and helps in making the poems more presentable. Carpe Diem poetry also has a number of benefits to the Renaissance period sinceShow MoreRelatedCarpe Diem Essay659 Words   |  3 Pages The Latin phrase carpe diem can be translated into English as seize the day. Seizing the day means making the most out of ones life. It is a theme that is commonly found in literature, most notably, poetry. Poetry, like most of literature, goes through periods of change. In the seventeenth century, poetry began to move away from humanism and began to explore the everyda y mans thoughts and feelings. Robert Herrick and Andrew Marvell were two poets who wrote during this time of change.Read MoreThe s Coy Mistress By Andrew Marvell And The Flea1919 Words   |  8 PagesThe representation of sexual pleasure and intercourse throughout â€Å"To His Coy Mistress† by Andrew Marvell and â€Å"The Flea† by John Donne functions as a way to present, confirm and refute the traditional stereotypical view of carpe diem love poetry. The speakers within both poems aim to â€Å"seize the day† by wooing and taking advantage of women and their virginity and sexuality. They not only want to take advantage of the time they have but also make sure they do not regret not doing anything in the futureRead More To His Coy Mistress Essay: The Carpe Diem Motif833 Words   |  4 Pages The Carpe Diem Motif in To His Coy Mistress nbsp; Seize the day. For cavalier poets, there seemed to be little else they found nearly as interesting write about than the carpe diem concept. The form of carpe diem poetry is generally consistent, almost to the point of being predictable. Though Andrew Marvell worked with the same concepts, his modifications to them were well-considered. In To His Coy Mistress, Marvell makes use of allusion, metaphor, and grand imagery in order to conveyRead MoreLiving Life to Its Fullest--Andrew Marvell’s Poem, â€Å"to His Coy Mistress†948 Words   |  4 PagesLife to its Fullest â€Å"Carpe diem† is a Latin phrase that is commonly translated as â€Å"seize the day.† Many poems contain ideas that are similar to that of carpe diem. They discuss how one must cherish every moment of his or her life because life is limited and will eventually come to an end. Andrew Marvell’s poem, â€Å"To His Coy Mistress,† is an example of a carpe diem themed poem. Through the use of invigorating imagery, multiple tones, and thought-provoking metaphors Marvell develops an allegoryRead More Theme of Carpe Diem in A Fine, a Private Place by Ackerman and To His Coy Mistress by Marvell866 Words   |  4 Pages The words carpe diem mean â€Å"seize the day† in Latin. It is a theme that has been used throughout the history of literature and has been a popular philosophy in teaching from the times of Socrates and Plato up to the modern English classroom. Carpe diem says to us that life isn’t something we have forever, and every passing m oment is another opportunity to make the most out of the few precious years that we have left. In the poems â€Å"A Fine, a Private Place† by Diane Ackerman and â€Å"To His Coy Mistress†Read MoreEmphasizing The True Meaning Of Poems By Andrew Marvell And John Donne s A Valediction : Forbidding Mourning1148 Words   |  5 Pagesâ€Å"Emphasizing the True Meaning of Poems† Around the seventeenth century the poets Andrew Marvell and John Donne expressed their feelings through poetry. Both John Donne, born in 1572 and Andrew Marvell, born in 1621 in England, are known for their ideas of metaphysical poetry. Metaphysical poetry is a persuasive poem that uses a conceit. It focuses on imagery, paradoxes, arguments, philosophy and religion. Andrew Marvell’s â€Å"To His Coy Mistress† and John Donne’s â€Å"A Valediction: Forbidding MourningRead More Analysis of To His Coy Mistress by Andrew Marvell Essay809 Words   |  4 PagesAnalysis of To His Coy Mistress by Andrew Marvell Andrew Marvells elaborate sixteenth century carpe diem poem, To His Coy Mistress, not only speaks to his coy mistress, but also to the reader. Marvells suggests to his coy mistress that time is inevitably rapidly progressing and for this he wishes for her to reciprocate his desires and to initiate a sexual relationship. Marvell simultaneously suggests to the reader that he or she should act upon their desires as well, to hesitate no longerRead MoreThe Metaphysical And Victorian Concept Of Love Essay1308 Words   |  6 Pagesin Porphyria s Lover by Robert Browning with the playful love in nature in To His Coy Mistress by Andrew Marvell. Love has multiple definitions and it has so far remained among the most complex subject that require a single particular definition to define its meaning. Plato once said At the touch of love everyone becomes a poet and that s why may be we have so many diverse poetry on the subject of love with so many different definitions of love that are av ailable. Shakespeare wrote inRead More The Poetry of Andrew Marvell and John Donne Essay951 Words   |  4 PagesThe Poetry of Andrew Marvell and John Donne The seventeenth century was an era of beautiful poetry. Two poets in particular, Andrew Marvell and John Donne, wrote carpe diem poetry full of vivid imagery and metaphysical conceits. Each conveyed the message of living for the now. This message can be clearly seen in the poems To his Coy Mistress by Marvell and Donne’s Flea. By using clever metaphors and meter, the poems not only are symbolic, but have almost a physical aspect to them. ThoughRead More Comparing Andrew Marvells To His Coy Mistress and John Donnes Flea765 Words   |  4 PagesAndrew Marvell’s To His Coy Mistress and John Donne’s Flea Andrew Marvell and John Donne both wrote â€Å"carpe diem† poetry full of vivid imagery and metaphysical conceits. This message can be clearly seen in the poems To His Coy Mistress by Marvell and Donne’s Flea. Though both poems take a similar approach to the topic addressed, it is Marvell that writes more thoughtfully and carefully, coercing instead of Donne’s seemed demanding\begging. The speaker in â€Å"Coy Mistress† is trying to convince

Monday, December 9, 2019

Are Children Growing Up Too fast free essay sample

A multiplicity of literature is available through recent researches which suggest that the current generation of teenagers is very different from children their ages in the past, given new manifestations in their behaviors when compared with their previous generations. Is this true or not? A compelling argument will be made by this Author to show that in his perception that children are growing up too fast. THESIS STATEMENT An examination of trends in current teenage behavior; in order to prove that children are growing up too fast. Hymowitz (1998) discussed his experiences of a daughter who in his generalised assessment â€Å"morphed from child to teenager† (p. 212). This theme resonated throughout his writings in the article â€Å"Tweens: Ten gong on Sixteen†. In one particular instance, Hymowitz (1998) cited statements attributed to Henry Trevor, a school director who stated â€Å"there is no such thing as preadolescence anymore, kids are teenagers at ten†. I support the thesis statement of early development of the current teenage generation, given the preponderance of literature which supports such thinking. We will write a custom essay sample on Are Children Growing Up Too fast or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page For example, research by the Sunday Sun (2011) established that children were growing up too quickly due to a combination of factors such as â€Å"combination of early testing in school, advertising, bad childcare, and a reliance on computer games and television† (p. 1). In another research by Hughes (2009) she supported discussions by Hymowitz (1998) and the Sunday Sun (2011) on the noted changes in behavioral patterns of current teenagers as opposed to their predecessors. Further, bestselling author Dame Jacqueline Wilson ( 2008) writing for the Birmingham Post in a poll found that â€Å"more than half of parents believe childhood is now over by 11† ( p. 1), a view which endorses my contention that children are growing up much faster than their predecessors given a multiplicity of factors. In this example through the admission of the majority of Parents surveyed. My own experiences having raised three children, two girls and a boy have shown that access by them to technology such as the computer, other technological devices and access to the internet and television programming have contributed to aspects of their own self development which were not available to their predecessors and in my own considered judgment, based on these developments allow for a level of maturity beyond their young ages. Given the observations on growing p too fast, as discussed above and inclusive of research and findings by Hymowitz (1998) which articulated on trends observed n the society in which his daughter grew up, supporting discussions by the Sunday Sun ( 2011); Hughes (2009); Wilson ( 2008) and my own experiences in observing the phenomena of children maturing at an earlier age than their predecessors, I submit and support the thesis statement that children are growing up much faster currently than their predecessors based on the evidence provided in the discussion which support such conclusions. The phenomena of young children developing a more matured status as opposed to their predecessors have been noted by a number of researchers. This development have been attributed to a number of factors related to technology, exposure to activities through various technological means which enhance their own education and even the attitude by parents, which allow for a more matured development of children at an earlier age than was done for previous generations of children. The resultant has been the development of young children who are matured beyond their ages, based on their current behavioral trends and support the theme that they are growing up too fast when compared with children of similar ages n the past.

Monday, December 2, 2019

Transferring Family Business Essay Example

Transferring Family Business Essay PFP Guest Family Business Succession Planning January 1, 20XX Page 2 of 9 Transferring Your Family Business As a business owner, youre going to have to decide when will be the right time to step out of the family business and how youll do it. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die. Perhaps you have children or other family members who wish to continue the business after your death.Obviously, youll want to transfer your business to your successors at its full value. However, with income, gift, and potential estate taxes, it takes careful planning to prevent some (or all) of the business assets from being sold to pay them, perhaps leaving little for your beneficiaries. Therefore, business succession planning must include ways not only to ensure the continuity of your business, but also to do so with the smallest possible tax consequences. Som e of the more common strategies for minimizing taxes are explained briefly in the following sections.Remember, none are without drawbacks. Youll want to consult a tax professional as well as your estate planning attorney to explore all strategies. This allows your beneficiaries more time to raise sufficient funds or obtain more favorable interest rates. The business must exceed 35 percent of your gross estate and must meet other requirements to qualify. Selling your business interest outright When you sell your business interest to a family member or someone else, you receive cash (or assets you can convert to cash) that can be used to maintain your lifestyle or pay your estate taxes.You choose when to sellnow, at your retirement, at your death, or anytime in between. As long as the sale is for the full fair market value (FMV) of the business, it is not subject to gift tax or estate tax. But if the sale occurs before your death, it may be subject to capital gains tax. Transferring y our business interest with a buy-sell agreement A buy-sell agreement is a legal contract that prearranges the sale of your business interest between you and a willing buyer.A buy-sell agreement lets you keep control of your interest until the occurrence of an event that the agreement specifies, such as your retirement, disability, or death. Other events like divorce can also be included as triggering events under a buy-sell agreement. When the triggering event occurs, the buyer is obligated to buy your interest from you or your estate at the FMV. The buyer can be a person, a group (such as co-owners), or the business itself. Price and sale terms are prearranged, which eliminates the need for a fire sale if you become ill or when you die.Remember, you are bound under a buy-sell agreement: You cant sell or give your business to anyone except the buyer named in the agreement without the buyers consent. This could restrict your ability to reduce the size of your estate through lifetime gifts of your business interest, unless you carefully coordinate your estate planning goals with the terms of your buy-sell agreement. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die.You and your estate may get some relief under the Internal Revenue Code If you are prepared to begin transferring some of your business interest to your beneficiaries, a systematic gifting program can help accomplish this while minimizing the gift tax liability that might otherwise be incurred. This is done by utilizing your ability to gift up to $12,000 per year per recipient without incurring gift tax. By transferring portions of your business in this manner, over time you may manage to transfer a significant portion of your business free from gift tax.Clearly, the disadvantage of relying solely on this method of transferring your business is the amount of time neces sary to complete the transfer of your entire estate. In addition, Section 6166 of the Internal Revenue Code allows any estate taxes incurred because of the inclusion of a closely held business in your estate to be deferred for 5 years (with interest-only payments for the first four years and interest plus principal due in the fifth year), and then paid in annual installments over a period of up to 10 years.See disclaimer on final page January 1, 20XX Page 3 of 9 Grantor retained annuity trusts or grantor retained unitrusts A more sophisticated business succession tool is a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). GRAT/GRUTs are irrevocable trusts to which you transfer appreciating assets while retaining an income payment for a set period of time. At either the end of the payment period or your death, the assets in the trust pass to the other trust beneficiaries (the remainder beneficiaries).The value of the retained income is subtracted from the v alue of the property transferred to the trust (i. e. , a share of the business), so if you live beyond the specified income period, the business may be ultimately transferred to the next generation at a reduced value for estate tax or gift tax purposes. A more sophisticated business succession tool is a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). Self-canceling installment notesA self-canceling installment note (SCIN) allows you to transfer the business to the buyer in exchange for a promissory note. The buyer must make a series of payments to you under that note. A provision in the note states that at your death, the remaining payments will be canceled. SCINs provide for a lifetime income stream and avoidance of gift tax and estate tax similar to private annuities. Unlike private annuities, SCINs give you a security interest in the transferred business. Family limited partnershipsA family limited partnership can also assist in transferring your busi ness interest to family members. First, you establish a partnership with both general and limited partnership interests. Then, you transfer the business to this partnership. You retain the general partnership interest for yourself, allowing you to maintain control over the day-to-day operation of the business. Over time, you gift the limited partnership interest to family members. The value of the gifts may be eligible for valuation discounts as a minority interest and for lack of marketability.If so, you may successfully transfer much of your business to your heirs at significant transfer tax savings. Private annuities A private annuity is the sale of property in exchange for a promise to make payments to you for the rest of your life. Here, you transfer complete ownership of the business to family members or another party (the buyer). The buyer in turn makes a promise to make periodic payments to you for the rest of your life (a single life annuity) or for your life and the life o f a second person (a joint and survivor annuity).A joint and survivor annuity provides payments until the death of the last survivor; that is, payments continue as long as either the husband or wife is still alive. Again, because a private annuity is a sale and not a gift, it allows you to remove assets from your estate without incurring gift tax or estate tax. Until very recently, exchanging property for an unsecured private annuity allowed you to spread out any gain realized, deferring capital gains tax. Proposed regulations have effectively eliminated this benefit for most exchanges, however.If youre considering a private annuity, be sure to talk to a tax professional. See disclaimer on final page January 1, 20XX Page 4 of 9 Grantor Retained Annuity Trust (GRAT) Definition A grantor retained annuity trust (GRAT) is an irrevocable trust into which a grantor makes a one-time transfer of property, and in which the grantor retains the right to receive a fixed amount of principal and interest at least annually for a specified term of years. At the end of the retained nterest period or upon the death of the grantor, whichever is earlier, the property remaining in the trust passes to the remainder beneficiaries or remains in trust for their benefit. A transfer of property to an irrevocable trust is a taxable gift. The value of the gift on which gift tax is imposed is generally its fair market value. However, because the grantor retains an interest in a GRAT, the value of the transfer is discounted; gift tax is imposed only on the remainder interest (and any gift tax due may be sheltered by the grantors $1 million lifetime gift tax exemption).This taxable value is calculated using an interest rate provided by the IRS (known as the discount rate or Section 7520 rate), which is based on current interest rates and changes monthly. This interest rate assumes the GRAT property will earn a certain rate of return during the annuity period. Any actual return that exceeds t he assumed return passes to the remainder beneficiaries gift and estate tax free. Investment performance, therefore, is central to this strategy. Key tradeoffs If the GRAT property underperforms the Section 7520 rate, no tax savings is achieved (and if the GRAT is depleted, no property is transferred to the remainder beneficiaries) If the GRAT property underperforms the Section 7520 rate, gift taxes paid and/or any applicable exclusion amount used will be wasted (though the amounts would be minimal)If the grantor does not outlive the term of years, any property remaining in the GRAT is includable in the grantors gross estate for federal estate tax purposes If the GRAT is unsuccessful, any costs incurred to create and maintain the GRAT will be wasted †¢ †¢ How is it implemented? †¢ †¢ †¢ †¢ Hire an experienced attorney to draft the GRAT document Have property that is transferred to GRAT professionally appraised Transfer property to GRAT (i. e. , retitle assets) File gift tax returns For a GRAT to be successful: †¢ †¢ †¢ The grantor must outlive the term of years The GRAT property must outperform the Section 7520 rate The GRAT document must be properly drafted Potential tax advantages of a GRAT include: Because of the retained interest, the value of the transfer for federal gift tax purposes may be discounted Principal remaining in the GRAT at the end of the term of years is removed from the grantors gross estate for federal estate tax purposes Interest (i. e. , appreciation and/or earnings) remaining in the GRAT at the end of the term of years passes to the remainder beneficiaries federal gift tax free †¢ †¢ See disclaimer on final page January 1, 20XX Page 5 of 9 Grantor Retained Unitrust (GRUT) DefinitionA grantor retained unitrust (GRUT) is an irrevocable trust into which a grantor makes a one-time transfer of property, and in which the grantor retains the right to receive a variable amount of principal and interest (based on a fixed percentage) at least annually for a specified term of years. At the end of the retained interest period or upon the death of the grantor, whichever is earlier, the property remaining in the trust passes to the remainder beneficiaries or remains in trust for their benefit. A transfer of property to an irrevocable trust is a taxable gift.The value of the gift on which gift tax is imposed is generally its fair market value. However, because the grantor retains an interest in a GRUT, the value of the transfer is discounted; gift tax is imposed only on the remainder interest (and any gift tax due may be sheltered by the grantors $1 million lifetime gift tax exemption). This taxable value is calculated using an interest rate provided by the IRS (known as the discount rate or Section 7520 rate), which is based on current interest rates and changes monthly. This interest rate assumes the GRUT property will earn a certain rate of return during the annuity perio d.Any actual return that exceeds the assumed return passes to the remainder beneficiaries gift and estate tax free. Investment performance, therefore, is central to this strategy. A GRUT is the same type of trust as a grantor retained annuity trust (GRAT), except that with a GRAT, the grantor receives a fixed annuity amount rather than a variable unitrust payment. Because of this, the grantor of a GRUT receives more income than with a GRAT, reducing the potential for tax savings. And, because the unitrust payment must be recalculated each year, the cost to administer a GRUT may be greater than with a GRAT.Another important difference between these two trusts is that unlike a GRAT, a GRUT cant be zeroed out, and therefore a taxable gift always results. Potential tax advantages of a GRUT include: †¢ Because of the retained interest, the value of the transfer for federal gift tax purposes may be discounted Principal remaining in the GRUT at the end of the term of years is removed from the grantors gross estate for federal estate tax purposes Interest (i. e. , appreciation and/or earnings) remaining in the GRUT at the end of the term of years passes to the remainder beneficiaries federal gift tax free †¢ †¢ Key tradeoffs If the GRUT property underperforms the Section 7520 rate, there is no excess and no tax savings is achieved (and if the GRUT is depleted, no property is transferred to the remainder beneficiaries) If the GRUT property underperforms the Section 7520 rate, gift taxes paid and/or any applicable exclusion amount used will be wasted (though the amounts would be minimal) If the grantor does not outlive the term of years, any property remaining in the GRUT is includable in the grantors gross estate for federal estate tax purposes If the GRUT is unsuccessful, any costs incurred to create and maintain the GRUT will be wasted †¢ †¢ How is it implemented? †¢ †¢ †¢ †¢ Hire an experienced attorney to draft the GRUT document Have property that is transferred to the GRUT professionally appraised Transfer property to GRUT (i. e. , retitle assets) File gift tax returns For a GRUT to be successful: †¢ †¢ †¢ The grantor must outlive the term of years The GRUT property must outperform the Section 7520 rate The GRUT document must be properly drafted See disclaimer on final page January 1, 20XX Page 6 of 9 Planning for Succession of a Business InterestBusiness Succession Planning Alternatives Lifetime Gifts If you want to: Sell your business interest If you want to: Give business to your children If you want to: Sell business to your children If you want to: Bequest Lifetime Sale Estate Sale Buy-Sell Agreement Buy-sell agreement can be used to guarantee the sale of your business Not appropriate Not appropriate You may be able to sell your business outright-but there is no guarantee You can control the timing and size of the gifts You control the Not appropriate size of the gift through y our willYour estate may be able to sell your business outrightbut there is no guarantee Not appropriate Not appropriate Can be used in Not appropriate You can control conjunction timing of salebut sale is not with sale guaranteed You can control timing of salebut sale is not guaranteed Your child could buy from your estate-but sale is not guaranteed Value of business must be included in your estate Buy-sell can be used to guarantee your childs option to buy your interest Value of business must be included in your estate, but the buy-sell can help establish that valueCan be used to Will not reduce the minimize value of your estate Minimize value value of your of your estate estate and maximize gift tax exclusion See disclaimer on final page January 1, 20XX Select Options for Preserving a Family Business for Children Private Annuity Self-Canceling Installment Note Lifetime Gifts Yes Generally, yes Yes, to the extent the fair value of the business does not exceed the present value of t he annuity Yes No To the extent of the annual gift tax exclusion and the lifetime gift tax exemptionFamily Limited Partnership Yes To the extent of the annual gift tax exclusion and the lifetime gift tax exemption Value of gifts may be discounted Yes, but not to the extent payments are received back into your estate †¢ Generally, payments are return of basis and/or interest (ordinary income) †¢ You pay income tax on interest ncome †¢ You pay income tax on interest income Yes, but children do not receive a step up in cost basis Yes, but children do not receive a step up in cost basis Payments are return of basis, capital gain, and/or interest (ordinary income) †¢ †¢ Yes, but not to the extent payments are received back into your estate Yes, but not to the extent payments are received back into your estate You pay no income tax on annuity payments You pay taxes on all income earned by the trust Shifts future appreciation to children Yes Yes, to the extent the fair value of the business does not exceed the present value of the annuityGrantor Retained Annuity Trust Provides liquidity? No Minimizes federal gift tax? †¢ †¢ Minimizes federal estate tax? Shifts future appreciation to children Minimizes federal income tax? †¢ Shifts FLP income to children, who may be in lower tax brackets Minimizes federal capital gains tax? No, generally, for exchanges made after October 18, 2006 Capital gain can be reported over the period payments are received No No Yes, but children do not receive a step up in cost basis for gifted interests Lets you retain control of the business?Yes Payments received are subject to creditors Yes Yes Yes No Provides lifetime income? Yes, if general partner is a corporation Limited partners have no personal liability for business debts †¢ †¢ You may die before receiving full payment The buyers obligation is unsecured Transfer title Execute agreement Can be costly †¢ †¢ To extent you receiv e FLP income Yes Payments received are subject to creditors No †¢ †¢ Your creditors cannot reach gifted interests Gifted interests are subject to your childrens creditorsProtection against creditors? †¢ Payments received are subject to creditors †¢ Any risk? No You may die before receiving full payment No No Formalities? †¢ Many †¢ Transfer title Execute note Can be costly †¢ †¢ Transfer title Execute trust Can be costly Transfer title Page 7 of 9 See disclaimer on final page January 1, 20XX Costly? Yes No Page 8 of 9 Overview of Buy-Sell Agreement Forms Agreement Form Wait and see Buyer Business entity, co-owner, or both Co-owner Transaction overseen by trustee Business entity Business entity Works Well WithBusiness with two or more owners Business with two or more owners Simplifies plan when large number of owners Business with two or more owners Business with two or more owners Business with two or more owners, especially family business Bu siness with two or more owners, especially family business Business with two or more owners Unsuitable For Sole proprietor and single-shareholder corporation Sole proprietor and single-shareholder corporation Trusteed cross purchase Entity purchase (stock redemption) Section 302 stock redemption Section 303 stock redemption Reverse Section 303 stock redemption Cross purchase (crisscross) agreementMost expensive type Sole proprietor and single-shareholder corporation Sole proprietor and single-shareholder corporation Sole proprietor and single- shareholder corporation Sole proprietor and single-shareholder corporation Large number of owners (gets complicated with four or more) Business entity Business entity Co-owner Option plan Business entity, co-owner, or any eligible third party Sale not guaranteed Business with any number of owners, including sole proprietorship and single-shareholder Business with any number of owners, including sole proprietorship and single-shareholderAny sce nario where guaranteed sale is needed One-way buy-sell Business entity, coowner, or any eligible third party Sole proprietor with no willing buyer See disclaimer on final page January 1, 20XX Page 9 of 9 PFP Guest Neither Forefield Inc. nor Forefield Advisor provides legal, taxation, or investment advice. All content provided by Forefield is protected by copyright. Forefield claims no liability for any modifications to its content and/or information provided by other sources. Copyright 2007 Forefield Inc. All rights reserved.