Case study
Case Study: Offsetting Passive Income
At Breakwater Exchange, we help investors reduce tax exposure while preserving wealth. In this case, our team resolved a common 1031 exchange challenge with precision and care.
Avoiding Costly Mistakes With Smart Exchange Planning
As an executive at a Fortune 500 company, our client has a compensation package that is primarily compromised of company stock options As a result, her investment portfolio was quite robust, but heavily concentrated in this singular stock. If the performance of her company were to ever falter, her entire investment portfolio could be negatively impact.
Strategic Exchange Structuring With Breakwater Exchange
Breakwater Exchange suggested she sell off some off this position through the year since it was performing well, then reinvest the proceeds into something more diversified like ETFs. The only issue was the capital gains hit she would incur from selling off the stock, so we advised that we utilize bonus depreciation to offset that gain.
Outcome
The Outcome: Tax-Efficient Results Backed by Expertise
The client was able to execute the strategy, then used a portion of her proceeds to invest in a bonus depreciation fund . Instead of paying taxes, she was able to generate enough depreciation to offset the entire capital gain she realized. The client is now much more diversified and confident in her investment portfolio moving further due to the concentration risk being removed.
Furthermore, she gained exposure to more real estate which was something her portfolio was lacking entirely with the exception of her primary residence
Take Control of 1031 Solutions By Partnering With Breakwater Exchange
From tailored documentation to timing-specific strategy, Breakwater Exchange simplifies complex exchanges.
FAQs About Our 1031 Exchange Solutions
What happens if I don’t reinvest all my sale proceeds in a 1031 exchange?
Breakwater Exchange helps you strategically handle excess proceeds, or “boot,” so you don’t face unnecessary taxes. Our documentation and timing process ensures clarity and compliance.
Can Breakwater Exchange help if I’m reducing my mortgage amount in an exchange?
Yes. We evaluate debt replacement on every transaction and offer solutions, like offsetting cash or leveraging Zero strategies , to help you avoid mortgage boot tax exposure.
Is it better to take the boot early or after the exchange?
With Breakwater Exchange, boot is best handled upfront. We’ll work with your escrow team to release funds before the exchange begins, reducing complications and improving outcomes .
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