THE IRS CODE 1031 EXCHANGE ALTERNATIVE: P.A.T.

Private annuity trusts provide a powerful alternative capital gains tax reduction strategy to the section 1031 exchange to defer capital gains tax, eliminate estate/inheritance taxes, and to transfer appreciated real-estate property to one's heirs with deferred capital gains and depreciation recapture taxes.

A private annuity trust (PAT) provides owners of highly appreciated assets such as businesses, real estate, and stocks/equities the following benefits:

+ Capital Gains Tax Deferment
+ Lifetime Income Stream
+ Investment Flexibility
+ Deferred Depreciation Recapture Taxes
+ Disciplined Retirement Savings
+ Family Controlled
+ Program Eligibility
+ Tax Free Estate/Inheritance Transfer to one's Heirs

In many respects, a PAT is superior to a charitable remainder trust (CRT), installment sales. And unlike a section 1031 like-kind real estate tax exchange, a PAT can be created from the sale of a variety of appreciated assets and not just sale of real estate property.

This trust is especially useful for deferring taxes on appreciated assets such as real estate and other equities - for property that does not qualify for 1031 tax treatment as well as 1031 qualified property.

If you are confused, just ask me or read this: Private Annuity Trusts:Questions and Answers
By Ray A. Smith From The Wall Street Journal Online