Disposing of assets has become a widely used technique to help companies manage their cash flow, streamline their business, pay down debt, increase operating efficiencies and even to pave the way with the Federal Trade Commission (FTC) or Department of Justice, Antitrust Division (DOJ), for a merger or acquisition. Often, when disposing of assets, companies have no plans for replacement. As a result, they may be faced with a tax liability on gain from the disposition. That tax liability can reduce the resulting cash flow and available capital by up to 40% of the gain. Though many companies consider using like-kind exchange to defer that gain, often they are unable to complete an exchange due to insufficient replacement property or the complexities associated with implementation.

CapExchange is a like-kind exchange program that assists companies in deferring the gains on the disposition of their assets, despite the fact that they may not have plans to purchase specific replacement property. Through our CapEx program, we examine the company's already budgeted-for capital expenditure and their asset acquisition plans to find sufficient and appropriate replacement property, including self-constructed assets. This process frequently uncovers property that has been overlooked for Sec. 1031 purposes. We then assist the company in creating the arrangement that allows them to capture replacement property costs such that they are eligible for like-kind exchange treatment.

By implementing the CapEx program, companies may significantly increase their cash flow and realize substantial net present value cash flow benefits by deferring taxes on gain using already known and budgeted costs. The improved cash flow increases the company's buying power and enables them to expand existing business operations.

For more information, please contact one of the product leaders listed below.
Adam Handler National Leader, LKE Services 213-356-6499
Anne Andrews National Champion, CapExchange 408-817-3797

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