Jul 10, 2014
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Leave a Legacy

RSS By: Kevin Spafford, Legacy Project

Kevin Spafford is Farm Journal’s succession planning expert for the Farm Journal Legacy Project.  He hosts the nationally-televised ‘Leave a Legacy’ TV, facilitates an ongoing series of workshops for farm families across the U.S., and is the author of Legacy by Design: Succession Planning for Agribusiness Owners.

Why a Stock Bonus Offers Financial Advantages

Jun 15, 2010
From Legacy Moment eNewsletter (June 11, 2010).
Please join us for future issues, delivered via email each Friday.

Janette Green owns 100% of the family’s farming operation since her husband’s death seven years ago. Janette would like to transfer a controlling interest in the grain operation to her son Frank. Though he’s been working in the operation on a full-time basis since college, Frank has not acquired any shares of ownership.

Janette wants to gradually transition ownership to Frank over the next 10 years. She doesn’t want him to receive it as an unearned gift; on the other hand, he doesn’t have money to pay for an interest. Janette may want to consider using stock bonuses to transfer ownership to Frank.

A stock bonus for transferring ownership to a deserving next generation may have some advantages over gifting for the owner (parent) as well as the employee (next generation). Though a stock bonus triggers an income tax on the stock’s value, the highest individual income tax rate is still less than an owner’s marginal gift tax rate. The compensation deduction may reduce the net income tax on a stock bonus. And the employee’s (next generation’s) basis in the stock is fair market value with a stock bonus compared to a carryover basis for a gift.
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A true Western legend, an innovative Wisconsin dairy, and the first family of one of the world’s largest cheese producers… What have you been missing on Leave a Legacy TV?
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Personality Plus: A close look at how managerial styles help the Dell family work together effectively.

Leading the Change – Legacy Project Workshops
The next series of Legacy Project workshops are scheduled for Lincoln, Neb., on July 20, Des Moines, Iowa, on July 21 and Champaign, Ill., on July 23.
Sign up online or call the Farm Journal Events Hotline for more information: (800) 909-3681.

 

 

    

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