What the kids are looking at?

First, the lawyer says to the kids, “we need to determine the value of your father’s business. It throws out an income stream of $300,000 per year. Assuming that you had to hire a manager for $200,000, that’s a $100,000 a year income stream. Given current income rates the amount of principal needed to generate a dividend of $100,000 would be $2.5 Million. So, the store could be worth as much as $2.5 Million, we’ll need to get an appraisal. The rest of the property is pretty easy to determine, its worth about $1.4 Million. So, your dad’s estate is worth $4.9 Million. There is an exemption of $1.0 Million and that’s it. So there will be an estate tax of approximately $2.0 Million on this estate.” The boys were crestfallen. “$2.0 Million? We can’t come up with that kind of money right away.” “It gets worse”, said the lawyer. “Worse, how can it get any worse?” “Well, on the $800,000 retirement account, you have to pay income taxes to liquidate that account. So, you’re looking at income taxes of about $320,000 to take money out of that account in order to pay the estate taxes.” Bruno, Jr. was heart-broken and a bit angry, “you mean that we’ve worked in that store for 20 years smelling feet and in order to continue to own the store we might have to pay the Government $2.32 Million?” “That’s about the size of it”, said the lawyer. “But there is one piece of good news” said the lawyer. “What’s that”? asked Viggo. “The Government might allow you ten years to pay off the tax”.

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