Talk to a professional at Wealth Retention Services (WRS) in partnership with your Tax Counsel.    If your Adjusted Gross Income exceeds $500,000 and/or you are selling any kind of asset with more than $1 million in taxable gain, you may want to use the CLLC tax-saving strategy to save considerable income taxes at the same maintaining control of the cash from the asset sale or earned income. The set-up costs for a CLLC require this level of tax savings to be justified. Our standard is that your proposed tax savings must exceed three times the set-up costs.

Compute the amount of immediate tax savings and future tax savings (assuming you are creating a charitable contribution carryforward) as well as estate tax savings to discover if the CLLC strategy is worth it. Your Tax Counsel can make this computation.

The CLLC is structured where the taxpayer/transferor is given 100% voting rights, and 1% ownership.  The Charity is given 0% voting rights and 99% ownership.  It is this 99% ownership by a legally recognized Section 501 (c)(3) charity that makes the CLLC 99% tax-exempt.

The CLLC can purchase a high-cash value life insurance policy on the taxpayer/managing member, the face amount of such policy equal to the value of the transferred asset which when paid out, is both income-tax free and also estate-tax free.

The high-cash value life insurance can provide the necessary cash to ensure payment of the Promissory Note when it comes due, making the need for “other collateral” unnecessary.

No. The fact that the Charity does not actually receive the assets of the CLLC for 90 years reduces the value of the charitable contribution from 15% to 35%, depending on the type and value of the asset.  However, the designated charity can include the assets of the CLLC on its Balance Sheet. A licensed actuary computes today’s value of the charitable contribution to the taxpayer/contributor which will actually be transferred to the Charity in 90 years.

No. The CLLC in its operating agreement can establish a DAF (Donor Advisory Fund) which spells out that an IRC Section 501 (c)(3) is to receive the assets of the CLLC sometime from now to the next 90 years, the transferor or his heirs making that decision at a future time.

Yes.  We have expert licensed attorneys and accountants who are well-versed in this strategy who know what to do in the event of IRS challenge. Such defense won’t cost you a dime provided you followed all of the procedures in setting up and operating the CLLC.  We also strive to ensure you do not draw undue attention to your tax savings using this CLLC strategy.

Yes, but such ownership and receipt of operating income will trigger the CLLC filing and paying an income tax on Unrelated Business Taxable Income. We would suggest that the CLLC only loan the necessary capital outside of the CLLC to an operating company owned by the taxpayer/CLLC managing partner and the CLLC only receiving interest income, passive income.

Yes. The CLLC pays for life insurance with increasing cash value with 99% tax free dollars which is owned by the CLLC with the taxpayer’s family as beneficiaries.

Yes. This is why the Charity wants to be designated as the eventual beneficiary (90 years from the date of the contribution). If a Donor Advisory Fund is used, then the CLLC manager designates at a future time the actual Charity that is the beneficiary of the CLLC fund.

Yes. The high amount of cash value which appreciates over the life of the insurance contract and comes to be equal to the Promissory Note at the date of maturity, can be used as collateral. Meantime, the taxpayer makes interest only payments on the Promissory Note which increases the asset base of the CLLC to be further reinvested by the taxpayer/CLLC manager. If the interest payment is for business, the taxpayer/CLLC manager has a deduction for his business, only 1% taxable income to the CLLC.