The owner of a Texas legacy ranch had an offer to sell the land to a developer for $9 Million. The seller was concerned about how much he would have to pay in taxes since the ranch had appreciated significantly and had a low-cost basis. After consulting with their CPA, the seller learned they would owe nearly $2M in taxes after the sale.
The ranch owner sold the property to the developer, deferred the taxes, and netted $1.4 Million more than he otherwise would have received at the transaction close without proper tax planning. A 16% increase of funds at the transaction close and an 83% reduction in the tax obligation.