HOUSE_OVERSIGHT_022357.jpg
1.94 MB
Extraction Summary
5
People
3
Organizations
0
Locations
3
Events
2
Relationships
3
Quotes
Document Information
Type:
Financial analysis report
File Size:
1.94 MB
Summary
This confidential J.P. Morgan document, marked for House Oversight, is a financial analysis comparing two 20-year wealth transfer strategies. It argues that selling an asset to an Intentionally Defective Grantor Trust (IDGT) would generate an additional $2.6 billion for heirs compared to simply holding the asset, due to tax optimization. Although part of a collection of Epstein-related documents, this specific analysis is a generic example and does not mention Jeffrey Epstein or his specific finances.
People (5)
| Name | Role | Context |
|---|---|---|
| President Bush | President of the United States |
Mentioned as signing the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA") into law on June 7, 2001.
|
| President Obama | President of the United States |
Mentioned as signing the Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 into law on...
|
| Grantor | Asset Owner / Client |
The subject of the financial analysis, whose assets are either held or sold to a trust.
|
| Beneficiaries | Heirs |
The individuals who would inherit the net wealth from the Grantor's estate or trust.
|
| Corporate insiders | Regulated Individuals |
Mentioned in a disclaimer note, advised to consult with securities counsel regarding reporting issues under SEC Secti...
|
Organizations (3)
| Name | Type | Context |
|---|---|---|
| J.P.Morgan |
The creator of the document, providing financial analysis.
|
|
| U.S. House of Representatives Oversight Committee |
Implied by the document identifier 'HOUSE_OVERSIGHT_022357', suggesting this document was part of a collection provid...
|
|
| SEC (Securities and Exchange Commission) |
Referenced in relation to Section 16 of the Securities Exchange Act of 1934 concerning reporting issues for corporate...
|
Timeline (3 events)
December 17, 2010
President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010, which set estate, gift, and GST taxes at 35% with a $5MM exemption for 2011-2012.
USA
June 7, 2001
President Bush signed the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA") into law, changing estate, gift, and generation-skipping transfer taxes.
USA
Years 0-20
A hypothetical cash flow analysis comparing two scenarios for wealth transfer: 'Scenario 1: Hold asset' and 'Scenario 2: Sell asset to IDGT'.
Relationships (2)
The entire document is a plan for maximizing the 'Net wealth to beneficiaries' from the Grantor's assets.
Scenario 2 involves the Grantor selling an asset to an Intentionally Defective Grantor Trust (IDGT) as a wealth transfer strategy.
Key Quotes (3)
"A sale to an IDGT results in greater value for heirs than if the asset were held outright"Source
HOUSE_OVERSIGHT_022357.jpg
Quote #1
"Value added by IDGT: $2,611,998,266"Source
HOUSE_OVERSIGHT_022357.jpg
Quote #2
"Analysis assumes that at the end of year 5 the $41,522,399 cumulative remainder of cascading GRATs from page 5 is used as seed capital for another note at 9:1 leverage used to purchase $373,701,591 of assets at a 30% discount using today's long-term AFR of 2.89%"Source
HOUSE_OVERSIGHT_022357.jpg
Quote #3
Full Extracted Text
Complete text extracted from the document (2,864 characters)
CONFIDENTIAL
A sale to an IDGT results in greater value for heirs than if the asset were held outright
A sale to an IDGT results in greater value for heirs than if the asset were held outright
Cash flow example:
Scenario 1
Scenario 2: Sell asset to IDGT
Year
Hold asset
Grantor
Cost of taxes
Trust
0
Asset held/sold to trust*
$64,285,714
$64,285,714
Coverage
5,000,000
5,000,000
Gift tax on coverage
-
5
Assets from initial funding
100,544,702
7,570,535
(37,615,685)
130,589,853
Assets from cascading GRATS
72,558,032
59,045,460
(28,009,827)
41,522,399
Assets held/sold to trust**
533,859,416
533,859,416
20
Value of assets
2,066,664,527
763,711,690
(3,447,134,919)
4,750,087,756 ¹
Estate tax***
(1,136,115,490)
(420,041,430)
1,895,924,205
Net wealth to beneficiaries
930,549,037
343,670,261
(1,551,210,713)
4,750,087,756
Total value to beneficiaries
$930,549,037
$3,542,547,303
Value added by IDGT
$2,611,998,266
Scenario 2: Sell asset to IDGT
Year
Hold asset
Grantor
Cost of taxes
Trust
0
Asset held/sold to trust*
$64,285,714
$64,285,714
Coverage
5,000,000
5,000,000
Gift tax on coverage
-
5
Assets from initial funding
100,544,702
7,570,535
(37,615,685)
130,589,853
Assets from cascading GRATS
72,558,032
59,045,460
(28,009,827)
41,522,399
Assets held/sold to trust**
533,859,416
533,859,416
20
Value of assets
2,066,664,527
763,711,690
(3,447,134,919)
4,750,087,756 ¹
Estate tax***
(1,136,115,490)
(420,041,430)
1,895,924,205
Net wealth to beneficiaries
930,549,037
343,670,261
(1,551,210,713)
4,750,087,756
Total value to beneficiaries
$930,549,037
$3,542,547,303
Value added by IDGT
$2,611,998,266
1. Assets do not receive a step up in basis upon death
* Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $45,000,000
** Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $373,701,591
*** In scenario 1 an estate tax exemption of $1,000,000 is applied. This is the lesser of the $5,000,000 gift tax exemption applied to scenario 2 and the $1,000,000 applicable estate tax exemption in year 20
* Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $45,000,000
** Value shown is prior to assumed valuation discount of 30%, the value of assets for gift tax purposes is assumed to be $373,701,591
*** In scenario 1 an estate tax exemption of $1,000,000 is applied. This is the lesser of the $5,000,000 gift tax exemption applied to scenario 2 and the $1,000,000 applicable estate tax exemption in year 20
Assumptions: The arithmetic return of asset years 1-20=15%; of which ordinary income/short term capital gains = 15%;interest rate paid to grantor = 2.89%;
annual interest payment=$1,300,500; valuation discount = 30%; transfer tax rate (for transfers at the end of year 20) = 55%.
Numbers have been rounded for convenience, are only estimates for illustrative purposes and should not be relied upon. Corporate insiders
should consult with securities counsel as to any reporting issues under SEC Section 16 of the Securities Exchange Act of 1934 associated
with receiving shares in-kind.
Note: These materials should not be construed as providing legal, tax, or accounting advice.
On June 7, 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA") which significantly changed estate, gift, and
generation-skipping transfer taxes. On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Jobs
Creation Act of 2010, which institutes estate, gift, and GST taxes at 35% with a $5MM exemption for 2011 and 2012 (adjusted for inflation), after which rates and exemptions
will return to pre-EGTRRA levels.
annual interest payment=$1,300,500; valuation discount = 30%; transfer tax rate (for transfers at the end of year 20) = 55%.
Numbers have been rounded for convenience, are only estimates for illustrative purposes and should not be relied upon. Corporate insiders
should consult with securities counsel as to any reporting issues under SEC Section 16 of the Securities Exchange Act of 1934 associated
with receiving shares in-kind.
Note: These materials should not be construed as providing legal, tax, or accounting advice.
On June 7, 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA") which significantly changed estate, gift, and
generation-skipping transfer taxes. On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Jobs
Creation Act of 2010, which institutes estate, gift, and GST taxes at 35% with a $5MM exemption for 2011 and 2012 (adjusted for inflation), after which rates and exemptions
will return to pre-EGTRRA levels.
NOTE: Analysis assumes that at the end of year 5 the $41,522,399 cumulative remainder of cascading GRATs from page 5 is used as
seed capital for another note at 9:1 leverage used to purchase $373,701,591 of assets at a 30% discount using today's long-term AFR
of 2.89%
seed capital for another note at 9:1 leverage used to purchase $373,701,591 of assets at a 30% discount using today's long-term AFR
of 2.89%
J.P.Morgan
7
HOUSE_OVERSIGHT_022357
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