Taxes & Highly Appreciated Business Ownership

​Turning Growth Into Opportunity—Without Giving Half to Taxes

What began as a dream in your garage is now a thriving business.

You’ve built something remarkable—and with a potential sale on the horizon, you’re finally seeing the fruits of that hard work. But one big question looms: How do you transition out without losing a massive portion of your wealth to taxes?

In this Business Owners Edition of our Strategic Guide to Highly Appreciated Assets, we explore practical ways to reduce tax impact while aligning with your vision—for your family, your future, and your values.

Here are links to our intro, stock and real estate editions.

• Taxes & Highly Appreciated Assets – An Introduction
• Taxes & Highly Appreciated Stock
• Taxes & Highly Appreciated Real Estate

A Familiar Scenario

Let’s say you started your business 20 years ago as a solopreneur. Today, you lead a 25-person team and just closed your best year yet—earning over $1,000,000 personally for the first time.

You’re 61 now. You still enjoy your work, but you can’t picture doing it at this pace for much longer. Especially with grandkids in the picture.

A recent business valuation came in at $10,000,000. That’s the good news.

The bad news? Your CPA estimates that an outright sale could trigger a $2,400,000 tax bill.

So—what are your options? Here are strategies to consider based on three common legacy goals:

Goal 1: Support My Family During My Lifetime

You’ve invested well, but the sale proceeds will still fund a major portion of your retirement. Every dollar lost to taxes could limit your lifestyle. What can you do?

Option 1: Sell outright to a key executive or outside buyer

This is the simplest route. You sell, pay the taxes, and walk away with about $7.6 million in net proceeds. From there, you’ll need a plan to convert that into stable, lifetime retirement income.

One possible enhancement is an Installment Sale, which allows you to spread tax payments over time instead of taking the full hit in one year.

Option 2: Sell gradually to a key executive or family member

Want to stay involved for a few more years? A gradual transfer could work.

Consider a Restricted Bonus 162 Plan—a powerful way to reward and retain your successor while building capital for a future buyout.

Option 3: Transfer shares to a Charitable Remainder Trust (CRT)

If charitable giving is part of your vision, this can be a win-win.

You’ll get an upfront tax deduction, avoid taxes on the sale, and receive lifetime income from the trust. When you pass, the remaining value supports causes you care about.

Note: The IRS requires that this strategy be implemented before a sale is negotiated in order to preserve its tax advantages.

Goal 2: Provide for My Family After I’m Gone

Your personal income needs are covered—and now your focus is ensuring your wealth benefits future generations. How can you keep more in the family and less in taxes?

Option 1: Create a Family Limited Partnership (FLP)

Gifting ownership gradually through an FLP lets you maintain control while passing value to your children.

Additionally, you can often apply valuation discounts on gifts of minority interest, reducing transfer taxes.

If one child will run the business, consider a Wealth Equalization Trust to provide comparable gifts to others without diluting business leadership.

Option 2: Use Opportunity Zones

Selling shares and reinvesting in a qualified Opportunity Zone delays taxes for seven years.

Additionally, growth in the Opportunity Zone investment is tax-free—a powerful way to reposition wealth for legacy or future giving.

This strategy can also be paired with Tax-Loss Harvesting in the seventh year to further reduce your tax burden.

Goal 3: Maximize Impact on Causes I Care About

You’re ready to use your success to fuel purpose—and taxes reduce your giving potential. Here’s how to redirect those dollars for good.

Option 1: Gift shares to a Donor Advised Fund (DAF)

By gifting shares before a sale, you avoid capital gains tax and receive a charitable deduction—while creating a flexible fund for giving over time.

This option works well for those who want to support meaningful causes today or gradually over the years.

Option 2: Use a Charitable Remainder Trust (CRT)

If you’d like to receive income during retirement but want the remainder to benefit charity, a CRT offers the best of both worlds.

You also have the option to gift your CRT income later if your financial needs change—allowing you to increase charitable impact while retaining flexibility.

So… Which Strategy Is Right for You?

The best strategy depends on your goals—both personal and professional.

Most business owners use a combination of these tools, customized to their timeline, tax exposure, and legacy vision. With proper coordination between your financial planner, CPA, and estate attorney, you can ensure your years of hard work create long-term impact—not just a large tax bill.

With clarity and a coordinated plan, your business success can fuel your next chapter, bless your family, and support the causes you care about for decades to come.

Let’s build your plan together.

If you’re navigating a potential business sale, we’d be honored to help design a strategy that reflects your goals and unlocks your full legacy potential.

Click here to schedule a conversation!