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How Charity Can Benefit your Family and Society When it’s Time to Sell your Business

Originally published in the LA Business Journal An exit strategy for any business owner is just as important as the plan that keeps the business running and profitable. For closely-held businesses, deciding whether to sell and to whom is essential. There are also important considerations that have real and lasting financial and tax consequences, not only to the business but also to the business owner and his or her family. For California business owners, selling can trigger a significant taxable event, which can include as high as a 37.1% tax bill right off the top between federal and state taxes. That significant tax liability ultimately means less money to you and your family. The good news is that for those business owners who are charitably inclined and want to leave a lasting legacy, certain strategies can not only be beneficial to your family, but to society as well. When making a decision to possibly sell and entertain an offer of purchase, it’s important to understand that once an e ...

Nuts and Bolts: How to Roll Over Your Employer Retirement Plan Assets

There are two types of rollovers: direct and indirect. A direct rollover is paid from your plan directly to your IRA or to your new employer’s retirement plan. The funds are never payable to you. An indirect (60-day) rollover is a payment made to you that you later roll over to an IRA or an employer retirement plan.1 When you request a distribution from your employer’s 401(k), 403(b), or governmental 457(b) plan that’s eligible for rollover, you’ll receive a statement describing the tax rules applicable to your distribution and your rollover options.2 You should read that statement carefully. There are two major disadvantages to indirect rollovers. First, your plan is required to withhold 20% of the taxable portion of your payment for federal income taxes. You’ll get credit for that amount when you file your federal income tax return, but if you want to roll over the entire distribution, you’ll have to come up with the 20% that was withheld from other sources. Sec ...

Market Month: April 2019

The Markets (as of market close April 30, 2019) As April came to a close, each of the benchmark indexes listed here posted strong monthly returns. In fact, for several of the indexes, April brought to a close the best four-month stretch in many years. Both the Nasdaq and S&P 500 reached new highs during the month, as investors were encouraged by a shrinking trade deficit, favorable economic projections, low inflation, and stable interest rates. The Nasdaq led the way, nearing a monthly gain of almost 5.0%, followed by the large caps of the S&P 500, the small caps of the Russell 2000, the Global Dow, and the Dow, which gained over 2.5% for the month. During April, consumers saw gas prices climb as oil prices continued to soar. By the close of trading on April 30, the price of crude oil (WTI) was $63.42 per barrel, up from the March 29 price of $60.19 per barrel. The national average retail regular gasoline price was $2.887 per gallon on April 29, up from the March 25 selling price of $2.623, and ...

Quarterly Market Review First Quarter 2019

This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and features a quarterly topic. Overview: Market Summary World Stock Market Performance World Asset Classes US Stocks International Developed Stocks Emerging Markets Stocks Select Country Performance Select Currency Performance vs. US Dollar Real Estate Investment Trusts (REITs) Commodities Fixed Income Global Fixed Income Impact of Diversification Quarterly Topic: Déjà Vu All Over Again Quarterly Market Summary Index Returns   Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index re ...

What if No One in the Family Wants the Family Business?

As generations before us, most family business owners have invested considerable time, energy, savings, hopes, and dreams into the longevity of their business. Like many founders, family business owners often establish their business with the long-term intent of positioning the next generation to one day assume leadership. But, what if assumptions are wrong and they simply don’t want the business or they have other career aspirations in mind? Regrettably, it can—and does—happen. In fact, a recent survey indicated that fewer than half (45.5%) of those expecting to retire in five years and fewer than a third (29%) of those expecting to retire in under 11 years have selected a viable successor. (MassMutual, American Family Business Survey, 2007) The time to ask those all-important questions are sooner versus later. A large part of any solid succession plan is knowing who will assume the leadership role once the next generation assumes the reins—even if it means knowing the successor ...

Market Month: February 2019

The Markets (as of market close February 28, 2019) Each of the benchmark indexes listed here posted positive monthly gains, led by the Russell 2000, which lapped the field after gaining over 5.0% for the month. The small-cap index is almost 17.0% ahead of its 2018 closing value. Signs that a trade accord with China may be in the offing helped stimulate investors to trade throughout February. Also, word from the Federal Reserve that it may not raise the target interest rate range as aggressively as proposed last year has had a positive impact on stocks. Corporate earnings season continued on a relatively positive trend, while energy stocks rebounded as oil production was curbed, sending gas prices at the pumps higher. Overall, following the Russell 2000, the Dow posted the next highest monthly gain ahead of the Nasdaq, S&P 500, and the Global Dow. By the close of trading on February 28, the price of crude oil (WTI) was $57.26 per barrel, up from the January 31 price of $53.95 per barrel. The national ...

Brexit Update - February 2019

Summary of Brexit On June 23, 2016, the people of the United Kingdom voted by a margin of 51.9% to 48.1% to leave the European Union (EU), a customs, trade, political, and partial currency bloc comprising 28 countries in Europe. This outcome to the referendum was a surprise, effectively ousting UK Prime Minister David Cameron and briefly disrupting global markets. On March 29, 2017, the new Prime Minister Theresa May triggered Article 50 of the Lisbon Treaty, starting a two-year clock for the UK’s exit from the EU. In the months since, May and her government have been working to negotiate an exit (or “Brexit”, as a conglomeration of British and Exit) that both the UK and EU could abide that would ensure an orderly separation. An issue of particular importance in the Brexit negotiations is how to establish a custom’s border between the UK and EU. While for the most part the English Channel makes such a custom’s border between the two rather natural, the border between No ...

Market Month: January 2019

The Markets (as of market close January 31, 2019) Investors celebrated a month in which several indexes posted their best January performance in three decades. A strong labor market, low inflation, and a more "patient" Federal Reserve Board all sent encouraging messages to investors who were hungry for good news after last December's precipitous plunge. The Russell 2000 led the charge, closing the month more than 11% higher than its 2018 close, followed by a nearly 10% gain in the Nasdaq, while the S&P 500, Dow, and Global Dow all topped 7%. By the close of trading on January 31, the price of crude oil (WTI) was $53.95 per barrel, up from the December 31 price of $45.81 per barrel. The national average retail regular gasoline price was $2.256 per gallon on January 28, down slightly from the December 31 selling price of $2.266 and $0.351 lower than a year ago. The price of gold rose by the end of January, reaching $1,325.70 by close of business on the 31st, up from $1,284.70 at the end ...

How can You Lower the Costs of Owning a Vehicle?

Vehicle expenses can take a big bite out of your budget. According to a AAA report, the average annual total cost of owning and operating a new vehicle in 2018 was $8,849. Fortunately, you may be able to save money by reducing three costs. Depreciation: The loss of a vehicle's value over time was the largest expense associated with buying a vehicle, according to the AAA report. Depreciation accounts for almost 40% of the cost of owning a new vehicle — on average, $3,289. Some cars hold their value better than others, so it's important to consider resale value before you buy. Because depreciation lessens over time, buying a used vehicle or keeping a vehicle longer can help minimize the impact of depreciation. Insurance: The average annual cost of full-coverage auto insurance was $1,189. Premiums are based on many factors, including the vehicle make and model, and your location. Some vehicles may cost substantially more to insure because they are statistically more likely to be damaged i ...

Tax Scams to Watch Out For

While tax scams are especially prevalent during tax season, they can take place any time during the year. As a result, it's in your best interest to always be vigilant so you don't end up becoming the victim of a fraudulent tax scheme. Here are some of the more common scams to watch out for. Phishing Phishing scams usually involve unsolicited emails or fake websites that pose as legitimate IRS sites to convince you to provide personal or financial information. Once scam artists obtain this information, they use it to commit identity or financial theft. It is important to remember that the IRS will never initiate contact with you by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media. If you get an email claiming to be from the IRS, don't respond or click any of the links; instead forward it to phishing@irs.gov. Phone scams Beware of callers claiming that they're from the IRS. They m ...

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Disclosure

All First Bank blog information and content is strictly informational. It is not intended to be specific investment, tax, or legal advice. If you need detailed financial, investment, or tax advice, please contact a First Bank qualified professional. Please note, First Bank occasionally shares third-party content we find to be relevant and helpful to our audiences.