How do I plan the sale of my business without losing too much to taxes?

Owners tend to think of a sale as a price negotiation. It is really three negotiations happening at once: price, structure, and timing. The last two decide how much of the price you keep, and most of the leverage on them expires before the letter of intent is signed.

Asset sale versus stock sale is the first fork

Buyers usually want an asset purchase, because they get a stepped-up basis in the assets and future depreciation and amortization deductions. Sellers usually prefer a stock or equity sale, because gain is generally capital in nature rather than split across asset classes, some of which produce ordinary income — depreciation recapture, inventory, and consulting or non-compete payments among them.

In an asset sale, both parties must allocate the purchase price among asset classes and report that allocation on Form 8594. The allocation is a negotiated number with real tax consequences, and it is frequently conceded by sellers who did not model it.

If you are a C corporation, look hard at QSBS

Section 1202 lets non-corporate taxpayers exclude gain on qualified small business stock in a domestic C corporation. The 2025 tax law (the One Big Beautiful Bill Act, signed July 4, 2025) significantly expanded it for stock acquired after July 4, 2025:

• The per-issuer cap on excludable gain rose from $10 million to $15 million, and the thresholds are now indexed for inflation.
• The corporation's aggregate gross asset ceiling rose from $50 million to $75 million.
• A tiered holding period applies: 50% exclusion after three years, 75% after four years, and 100% after five years.
• Stock acquired on or before July 4, 2025 keeps the prior rules — 100% exclusion after five years, $10 million cap.

QSBS is technical: original issuance, active business requirements, excluded industries (including most professional services), and redemption rules can all disqualify stock. It is also the single largest tax lever available to many owners, and it is a lever you can only pull if the structure was in place years earlier.

Double taxation is a structure problem, not a closing problem

A C corporation selling assets pays corporate-level tax, and the shareholders pay again when proceeds are distributed. Converting an S corporation from C status does not solve this immediately: built-in gains tax applies to net recognized built-in gain during the recognition period after conversion. That period is measured in years, which is precisely why entity decisions belong in year one of an exit plan, not year zero of a deal.

Spread the gain when spreading helps

An installment sale lets you report gain as payments are received rather than all at once, which can keep more of the gain out of the top brackets and out of the 3.8% net investment income tax in a single year. It also introduces credit risk on the unpaid balance, and it does not apply to inventory or to depreciation recapture, which is recognized in the year of sale.

Rollover equity, earnouts, and seller notes all shift timing too, and each one changes both your tax picture and your risk exposure. They should be modeled together, not evaluated one at a time by whoever raises them first.

Charitable and estate levers work only before a deal is binding

Gifting shares to a donor-advised fund or charitable remainder trust, or moving shares into a trust for the next generation, is far more effective before the company is under a binding agreement — both because the valuation is lower and because assigning income after a sale is effectively locked in can be recharacterized. With the federal basic exclusion amount at $15,000,000 per person for decedents dying in 2026, pre-sale transfers of a fast-appreciating interest are one of the most efficient uses of exemption available to an owner.

State residency and Louisiana specifics

Where you are domiciled at closing matters, and so does where the business operated — states can tax gain sourced to business activity within their borders regardless of your residency. Louisiana owners should also plan around community property: a business built during the marriage carries a community claim, which affects both a divorce and an estate.

The practical sequence

• Three to five years out: fix entity structure, clean up the balance sheet, test QSBS eligibility, separate real estate from operations.
• Two years out: build the personal financial plan that tells you the number you actually need, and model asset versus stock outcomes after tax.
• One year out: complete gifting or charitable transfers while valuation still supports them.
• In the deal: negotiate allocation and payment timing with the after-tax model in front of you, not afterward.
• After closing: invest proceeds against the plan — this is where a concentrated illiquid risk becomes a diversified liquid one.

This is a general overview, not tax advice for your situation. The specifics — entity, basis, state exposure, and the terms in front of you — decide the answer, and we do that modeling with your CPA and deal counsel.