Starting a business and want to pay the lowest taxes on a capital gain.

[jayree1]

I've been reading a lot of the posts regarding this subject but none apply directly to my situation so any help is appreciated.

I recently sold some shares in a side-business in order to pay off debt.  This lack of financial obligation has put me in a position start an LLC.  Basically, I'm looking for the most effective ways to keep taxable income low in order to pay as little as possible on the one time capital gains from selling.  I know I can write off business expenses, and I can get an SEP retirement account to avoid some other taxes. 

Also, my wife currently has a full-time job making 40K, and we have two mortgages on our home and a rental.  So I have two questions. 

Which SEP type retirement account will allow me the most tax free investing?
Are there other ways to keep our taxable income lower?

Thanks

[bwall]

The best way to reduce taxes is to not earn any money.

[Axecleaver]

SEP IRA will let you contribute up to 25% of your compensation, or $53,000, whichever is less. A Solo-k lets you contribute $18,000 for the employee portion, and up to 25% of your compensation, or $35,000 for the employer portion, whichever is less. Together this adds up to $53,000, but lets you get there with a lower total comp. The magic number is 140k for the solok, and 212k for SEP IRA.

https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions

[bwall]

SEP IRA will let you contribute up to 25% of your compensation, or $53,000, whichever is less. A Solo-k lets you contribute $18,000 for the employee portion, and up to 25% of your compensation, or $35,000 for the employer portion, whichever is less. Together this adds up to $53,000, but lets you get there with a lower total comp. The magic number is 140k for the solok, and 212k for SEP IRA.

https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions

Very important caveat about the SEP; if you have employees who have worked for you for over two years, you have to include all them at the same % rate on the SEP, or else you can't do it.

[protostache]

SEP IRA will let you contribute up to 25% of your compensation, or $53,000, whichever is less. A Solo-k lets you contribute $18,000 for the employee portion, and up to 25% of your compensation, or $35,000 for the employer portion, whichever is less. Together this adds up to $53,000, but lets you get there with a lower total comp. The magic number is 140k for the solok, and 212k for SEP IRA.

https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions

Very important caveat about the SEP; if you have employees who have worked for you for over two years, you have to include all them at the same % rate on the SEP, or else you can't do it.

The caveats for a solo 401k are even worse, since you can't do it at all if you have any employees that own less than 2% of the business. You have to do a much more expensive normal 401k with much more restrictive rules.

[Axecleaver]

Right, it's supposed to used for people in a very specific "self employed" scenario, with no employees, and it's not very flexible, but helpful if you're in that specific situation. I'm going through a conversion from Solo-k to a traditional 401k now - it's complicated, and I'll lose the ability to contribute a full 53k this year while I'm in the "penalty box", since I didn't convert between October and December last year.