Five Tax Tips Before Selling Your Business
Published on Β· Source: cnbc.com
AI Summary
Summarized by AI from the source belowEntrepreneurs looking to sell their businesses often overlook tax planning, potentially losing significant savings. A survey by BNY Wealth highlights that nearly half of professional advisors report their clients spend insufficient time on tax and wealth transfer planning. Michael Paulus, founder of PCM Encore, noted a similar oversight cost him hundreds of millions during the sale of Assurance IQ for $2.4 billion in 2019.
Edward Renn, a lawyer with Withers, advises business owners to assess their eligibility for the Qualified Small Business Stock (QSBS) tax exclusion. This exemption allows reduction of capital gains taxes if stock is held for more than five years. The One Big Beautiful Bill Act increased the maximum exemption to $15 million for stock issued after July 4, 2025. The QSBS exemption has specific eligibility requirements and excludes many trades like healthcare and accounting.
For ordinary investors, considering tax strategies like the QSBS exclusion could significantly maximize the proceeds from a business sale, making long-term planning crucial.
Informational only, not financial advice. Content is AI-generated and may contain errors. How this works.
Our take
Opinion from the Newsstocks AI desk, not investment adviceIn our view, entrepreneurs selling businesses should prioritize tax planning early to maximize financial gains. While the QSBS exemption offers significant potential tax reductions, understanding its criteria and timing is vital. This early focus could translate to notable financial benefits.
Key numbers
- Assurance IQ Sale Price
- $2.4 billion
- QSBS Maximum Exemption After 2025
- $15 million
What could help
- Eligibility for QSBS can significantly reduce capital gains taxes.
What could hurt
- Complex conditions for QSBS eligibility could limit access to tax benefits.
The background
Tax planning before selling a business can result in substantial savings. Different exemptions, like QSBS, help reduce tax liabilities.
Questions readers ask
What is the QSBS tax exemption?
The QSBS tax exemption allows reductions in capital gains taxes for stock held over five years, with specific conditions for eligibility.
How much was Assurance IQ sold for?
Assurance IQ was sold for $2.4 billion.
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