Turning Tax Burden into Financial Growth: A $1M Compensation Strategy

By, John M. Goralka
Sacramento, CA

Client is receiving over $1,000,000 in deferred compensation this year. The tax rate for a California resident is based upon the combined ordinary income tax rates for Federal and California is 54.1% (37% Federal; 3.8% NIIT and 13.3% California). The tax would otherwise amount to $541,000 or more. We recommended a “shark fin” CLAT (Charitable Lead Annuity Trust) with a 15 year term. Client contributes $500,000 which provides an income tax deduction of $500,000. This provides an income tax savings of $342,600. Client is a Trustee of the Trust and maintains investment control. With a 9% rate of return, Client will also receive $1,020,844 in cash at the end of the term.

Sacramento Estate Planning, Tax Planning and Business Attorney.

I’m John Goralka, a Sacramento Estate Planning, Tax Planning and Business Attorney at the Goralka Law Firm, P.C. If you have an estate, tax or business situation needing legal help, contact our team for experienced and friendly advice. You can contact us at 916-440-8036. Alternatively, you can use our convenient online contact form here on our website. We listen, and you can have your questions answered, your case evaluated, and explore your options for getting the legal help you need.

There are almost 200,000 attorneys in the state of California, and fewer than 100 of those attorneys are State Bar Specialists in Estate Planning, Trusts and Probate and State Bar Specialists in Taxation. I am one of the few attorneys with both critical specializations. I passed the California CPA examination and am a former income tax auditor and hearing officer. I am also recognized as a top attorney in the United States by US News and World Reports and by Best Lawyers and hold an AV rating from Martindale which is the premiere rating organization for attorneys. The AV rating is the highest possible rating for legal experience and for legal ethics.

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