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Hi, my name is Mark. I will be happy to help you with your questions. What type of asset to did sell to generate the capital gain?
What kind of entity was the startup (LLC, S-Corporation, C-Corporation)?
Did you sell your shares?
Unfortunately you would not be able to defer the gain. The capital gain rates range from 0-20%. How much of a gain did you have on the sale?
What was your basis in the stock?
Is the 3.6 all capital gain?
It sounds like you are receiving $400,000 and then you will receive a balloon payment. You would recognize the gain as you receive the cash. Do you have any other income? At a taxable income of just above $450,000 (for married filing joint) the capital rate increases from 15% to 20%. Assuming that there is not a lot of other income the majority of the capital gain would be taxed at a 15% rate for federal. You would also be subject to state taxes on the gain.
Are you married?
The 20% rate for single tax payers would start at taxable income above $415,050. The first $37,650 of the gain would be taxed at 0% federally. This is the amount of tax where you would be in the 10 and 15% bracket. If you are in the 10% and 15% bracket the capital gain rate is 0%. The amount above would be taxed at 15%. Of course you would need to considered the state taxes on the gain.
That is a positive.
A 1031 like kind exchange is not available for the sale of stock. It would be available for real property, equipment.
I am sorry that I could not provide a more tax friendly response.
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