The Problem – When there is a sale of a business, real property, or another capital asset held for longer than one year, the seller will likely owe capital gains taxes. The longer the seller held the capital asset, the more likely it is the asset has a minimal cost basis. The lower the cost basis, the more likely the seller will owe significant capital gains taxes. Savvy sellers will look for opportunities to defer these capital gains taxes.

President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) into law on March 27th, 2020. Congress designed this over $2 trillion economic relief package to protect the American people from the public health and economic impacts of COVID-19. The CARES Act established the Paycheck Protection Program (PPP) as a $669-billion business loan program to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses keep paying their workers.

Similar to the subprime mortgage bubble, a downgrade of a significant portion of the investment-grade corporate bond market could pose a systemic risk to our financial system because the majority of the investment in this market is done by some of the most interconnected companies in the world.

In a low-interest-rate environment, the basic mechanics of a life insurance company’s General Account do not work. This is because low-interest-rate environments cause spread compression between the General Account investment return and the guaranteed, fixed benefit payments supported by these assets.