NEED YOUR HELP: Seller is concerned about tax liability...Suggestions PLEASE

November 20, 2024

by a searcher in Dallas, TX, USA

Searchfunder community....I am seeking help! If a seller is planning to sell their business in###-###-#### Are you aware of any strategies that can help them lower their tax burden/capital gains tax? What comes to mind for me are.....increase the seller note or consider roll over equity. What do you think?

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Reply by a searcher
from University of Pennsylvania in Bloomfield, NJ, USA

A knowledgeable financial advisor and estate attorney team can be helpful to them here as well in the event they are interested in setting up a trust for example that is appropriate to their goals and value system. The timing of this setup matters from a tax perspective and there are many options. For example, if the seller is charitably inclined, there are special trusts that allow for multiple beneficiary types (charities, children/heirs, and the seller his/herself during retirement). If they have children with special needs, there are solutions there, etc. Your seller needs a stronger team around them in addition to a CPA and possibly a CEPA. ~^redacted‌

Reply by a professional
from Utah Valley University in Salt Lake City, UT, USA

There are many options to look into, including the two you mentioned (seller note and rollover equity), QSBS, and others. As ^redacted‌, the accountants on both sides need to be involved to ensure the proper structures are in place.

My firm is not a CPA firm, but we work with CPA firms on transactions. We are, however, a fractional CFO (and executive) firm and have a team that focuses on financial due diligence (QofE, etc.). I wanted to manage expectations that I am not providing tax advice.

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