Avoiding Tax on the sale of a business
Ed met with his advisors to discuss the company's value and identify potential buyers. Because the company's client base and product offerings had grown significantly over the years, Ed realized that the business would sell for a significant sum.
Ed: I knew I had a tax problem. If I sold the business, I would lose much of the value to taxes. I needed enough out of the sale so that my wife and I could retire comfortably.
Ed's advisors recommended he consider making a gift of some of his stock to his favorite charity. If Ed made the gift prior to the sale of his business, he would avoid capital gains tax on that stock and receive a charitable income tax deduction to further reduce his taxes on the cash he received from the sale.
Ed: I transferred $1 million in stock to charity and received a $1 million charitable income tax deduction. I was so happy I listened to my advisor and made the gift.
Ed's tax deduction made it possible for him to preserve his wealth by avoiding the payment of substantial capital gains tax on the sale of his business. As a result, Albert was able to use some of the cash from the sale to purchase a condominium and invest the balance for retirement.Is a gift of stock right for you?
An outright gift of stock can provide several tax benefits such as generating a charitable tax deduction and avoiding capital gains tax. Please contact us if you have any questions about outright gifts of stock.
Your benefits may be different. Click here to view an example of your benefits.