Selling Your Company? Consider Gifting Your Privately-Held Corporation Stock Prior to the Sale

Posted: 12-10-21 | Innovia Wealth

While challenging for businesses in so many ways, 2021 was a record-breaking year for mergers and acquisitions. Many business owners decided that, while the stock market was up and interest rates were low, it might be a great time to retire. If you are also selling your company, you will likely be interested in limiting your upcoming tax bill. Fortunately, there are ways to minimize capital gains taxes on large transactions. One of them is to give your privately-held corporation stock to a charitable organization as part of the sales transaction.

Benefits of Charitable Giving

At the end of the year, many people do give generously to charity. This is commendable and can be very personally rewarding. You are not limited to giving cash donations, however, or doing it at year’s end. Gifting non-publicly traded or complex assets in your portfolio can make an impact both for the donor and the recipient. They are often far more tax efficient than donating cash. How does it work?

Our Strategies Wealth Advisors team can help you identify your most powerful tax-efficient giving strategy. We can determine new asset opportunities and provide investment guidance when your assets have been liquidated. This is a complex process legally and financially, but we can help simplify it across all stakeholders.

There are benefits to gifting corporation stock for all parties involved. Donors can give more of value to the charities of their choice by minimizing the fees and costs involved. They will reduce their tax burden with the potential for an immediate fair market value tax deduction while at the same time minimizing their capital-gains tax burden. They can also give to multiple charities via one transaction.

Charitable recipients will potentially receive something of greater financial value than cash. The donation may be considerably larger than a simple cash donation would have been. The charity also avoids any expensive overhead costs and the work involved with diligence and oversight requirements. By being open to other methods of giving, the charity may manage to grow their own donor base as well. If done correctly, this is a win-win for everyone involved.

If you would like to combine the sale of your business with a significant charitable contribution of corporation stock and decrease your tax liability, Strategies Wealth Advisors can help. We will work with you to identify how to make the largest impact and prepare a contribution plan that will have the best benefit for the charities of your choice and your own net worth.