Tax Savings at Retirement for the Owner of a Small Business Corporation
研究了小型企业主退休后如何通过将劳动收入转为非劳动收入和资本利得，结合免税社保福利，实现联邦所得税大幅节省，同时保持个人现金流。
Tax Savings at Retirement for the Owner Of a Small Business Corporation* Retirement from the active management of a closely-held small business corporation can result in substantial savings in federal income taxes without significantly reducing the retired entrepreneur's personal cash flow. The receipt of tax-free Social Security benefits, when combined with the conversion of earned income into unearned income plus capital gains arrangements, opens the door to a number of attractive tax savings opportunities. * The author thanks Gorman Ledbetter of East Carolina University for reviewing an earlier version of this treatise. Ms. Jackie Ehrmann assisted in the research. Take the case of a married taxpayer who owns all of the stock in his family business. Assume that he receives a salary of $50,000, rent from the corporation of $10,000 a year on the business building which he himself owns, and $10,000 in taxable dividends on listed securities. His pre-retirement 1985 tax return and cash flow would be approximately as shown in exhibit 1. Now assume that this taxpayer retired in 1985 and that he and his wife were both over 65. Since he had paid the maximum Social Security tax each year since 1950 and had a non-working spouse, his tax-free Social Security benefit would have amounted to about 13,000 a year. Further assume that he received $10,000 of ordinary income from an annuity paid for by the corporation (employer), on which he therefore had no basis to recover. Under these revised circumstances, his federal income tax would have been $1,416, with a net cash flow of $31,584. As a result of retirement, he would have saved $14,812 in taxes but lost $12,188 in net cash flow. Several options might be considered to replace the lost cash flow. For tax purposes, director's fees would be treated as ordinary income and self-employment income, much as the retiree's former salary had been, but might have associated tax-exempt fringe benefits.1 A related consideration, however, is that earned income from services would reduce Social Security benefits one dollar for each two dollars of earned income in excess of $7,320 for 1985, for taxpayers between the ages of 65 and 70.2 (There is no loss of Social Security Benefits for earned income from services at age 70 or later.) An additional consideration is that any earned income after retirement would be taxable under either the Social Security tax or Self-Employment tax, subject only to minor $100 or $400 threshold rules. 1 Express Publishing Company, 32 AFTR 972. 2 SSA Sec. 203(f), (h), (j). Unearned income (dividends, interest, rent, pensions, etc.) is more attractive to the retiree than earned income from services as it does not reduce the Social Security benefit and is not subject to the Social Security or Self-Employment taxes.3 Therefore, lending money at interest to the corporation, renting it property, or receiving dividends from it are attractive options. Dividends, however, have the disadvantage of not being tax deductable to the paying corporation under present tax law. It is essumed in this example that the entrepreneur's firm is a C Corporation. In the case of an S Corporation, an income share received from the firm would not be considered as a dividend and therefore would not have to be treated as earned or self-employment income unless services were rendered.4 3 Sec. 1402, IRC. 4 Rev. Rule 59-22, CB 1959-1, 225. Another extremely attractive possibility is that of selling property to the corporation for a capital gain eligible for the 60 percent capital gain deduction. For example, if the building owned by the shareholders were sold to the corporation at fair market value, a capital gain might result after any ordinary income, due to recapture of accelerated depreciation. For the capital gain result, the shareholder and his or her spouse must own less than 80 percent of the stock in the corporation. …