Structure the sale before the term sheet, not after it.
For most owners, selling the business is the largest taxable event of their lives. The headline price gets all the attention, but what you keep depends on decisions that have to be made before you sign.
Once a sale agreement is binding, most of the planning options are gone. We work with owners in the window before that, so every tool the tax code offers is still on the table.
Pre-sale structuring.
Pre-sale structuring is the legal and tax work that decides your after-tax result: the entity that sells, how the deal is shaped, which trusts or charitable structures are in place, and how payments are received.
We review the business, the likely deal and your personal goals, then build the structure in the right order, ahead of the letter of intent where possible.
- Entity and ownership review ahead of a sale
- Asset sale versus stock sale, from the seller's side
- Trusts and charitable transfers before the value is locked in
- Coordination with your M&A advisor, buyer's counsel and accountant
Installment sales under IRC Section 453.
An installment sale lets an eligible seller recognize gain as payments are received instead of all in the year of the sale. When a buyer is financing part of the price, it can spread the tax over the life of the note.
The rules are detailed. The type of asset, depreciation recapture, related-party rules and the interest charge on larger notes all affect how much can be deferred. We model it before closing, so you know the real numbers.
- Note design: interest rate, amortization and security
- Gain recognition schedule modeled before closing
- Section 453A interest charge analysis on larger notes
- What can't be deferred, such as depreciation recapture
QSBS on the way out.
If the company is a C corporation and your stock qualifies under Section 1202, part or all of the gain may be excluded from federal tax, not just deferred. That has to be confirmed and documented before the sale, and it can change which structure makes sense.
The structure owners ask about most.
“The difference in having one quarterback for both tax and legal is immeasurable.”
Sale & Exit: common questions
How are taxes on the sale of a business calculated?
Generally, you pay tax on the gain: the sale price minus your basis in what you sold. How it's taxed depends on whether it's an asset sale or a stock sale, how the price is allocated, how long you've owned it, and state taxes. Structure and timing can change the result significantly.
When should I start planning the sale of my business?
Ideally a year or more before you expect to sell, and in any case before a binding agreement. Several of the most valuable strategies have to be in place before the deal is signed.
Can I defer capital gains tax when I sell my business?
Sometimes. Installment sales and deferred sales trusts can spread the gain over time, and QSBS may exclude some of it entirely. Whether they fit depends on the business, the buyer and your plans for the proceeds.
Thinking about selling?
Tell us about the business and your timeline. The earlier we see it, the more options you'll have.