An Almond Crop Sale
An almond grower in California had harvested his crop and was offered $600K.
- After all the deductions, the taxes on a conventional crop sale were $280K, or more than 46%.
- This would have left a net income of $320K after tax.
Clearly taxes were an issue.
By using a Structured Installment Sale Strategy, we enabled the farmer to spread the income from that year’s crop over 10 years at $64K per year.
- Based on that guaranteed income stream, the farmer was able to take a pledge loan for $450K with automatic payments built-in.
- Even if the loan payments and taxes are a complete wash over the next 10 years, the client realized an additional $130K income in the current year for an increase of 41% free cash flow.
- The Net Result: $450K tax free cash versus $320K from a conventional sale