Let’s assume I have a sole proprietor (schedule C) business, and that business is receiving a lump sum settlement from another company that infringed upon my businesses intellectual property. Let’s say the dollar amount is $350,000.
If the goal was to shelter as much from taxes as possible (regardless of the use) what would be some legitimate ways? One suggestion was to create a sole-proprietor 401K and profit sharing plan. You can put $40,000 in there tax-free.
Another idea was to have family members help the business and pay each of them a couple thousand dollars, which would be under the tax threshhold limits.
What are some other (legal) ideas?