When It's Time to Sell, Plan Ahead for Community Impact and Tax Advantages
Generous business owners are thoughtful planners. When it’s time to sell a business, planning ahead can create meaningful benefits for our community and yield significant personal advantages.
A donor’s most valuable assets often have the greatest tax-advantages when given to charity. For example, donating a privately held business interest triggers both a tax deduction of up to 30% of your AGI* and reduces – or may even eliminate – the related capital gains tax liability.
To achieve the greatest win/win, timing is essential. For example, avoiding capital gains tax won’t be an option if you’ve already entered into an agreement to sell your business. If you think donating a business may be right for you, we recommend a conversation with The Community Foundation and your advisor right away to think through your options.
The Community Foundation was built to efficiently and effectively advance the causes and issues that are most important to our donors. When selling a business, or any time a significant life event creates an opportunity for charitable giving at a new level, we recommend opening a fund at The Community Foundation. This is often the best way to minimize taxes and maximize your gifts to charity.
Creating a fund at the foundation gives you the long-term flexibility to make the best decisions about where and when you give to charity from your fund. Staff at The Community Foundation are happy to help. Donors receive the tax benefits upfront, and then recommend donations to the nonprofit/s they care about most, at whatever pace suits them. Some donors even choose to establish their fund as a way to involve their families in philanthropy for generations to come.
It’s easy to give through The Community Foundation. We are experienced nonprofit philanthropic advisors able to help you donate a business interest in ways that most area nonprofits are not. The Community Foundation has access to some of the most knowledgeable professional advisors in the area, a history of collaborating with donors and their advisors, relationships with nationally-respected charitable consultants and a staff with decades in philanthropy. The foundation has experience receiving shares of stock in your business and may other kinds of assets as well.
For the greatest impact in the community you love, trust a regional nonprofit leader. The Community Foundation offers what national competitors cannot: a keen awareness of local issues, a distinct familiarity with local nonprofits and an enduring commitment to the vitality of our region.
Please call Emma Miller-Richards, Fund Development Associate or Teri McNally, Executive Director at 540 373-9292 about charitable gift advantages when selling a business – we’re eager to discuss this opportunity with you and your professional advisors!
*Based on the fair market value of the business, if you itemize.
Generous gifts of privately held business interest can involve complex tax analysis and planning. This article is an overview of helpful considerations. It is not meant to provide tax or legal advice.
To begin planning a donation of privately held business interests, or any kind of asset, please consult with your tax advisor and The Community Foundation about your specific situation.
Emma Miller-Richards, Fund Development Associate
Jane Smith is getting ready to sell her privately held federal contracting company and retire. She is a board member of several nonprofit organizations and cares about many causes in the Rappahannock River region. She'd like to maximize her gifts to charity and minimize her taxes.
Jane's CPA recommends calling The Community Foundation to learn how they can help sell her business, open a fund at the foundation and donate the shares to her new fund. After a meeting to discuss her particular situation, Jane, her CPA and The Community Foundation staff create a plan of action to follow once she decides the time is right to sell.
The Community Foundation will facilitate the donation and sale of Jane’s asset – her business – and the proceeds will be placed into a Donor Advised Fund at The Community Foundation. As soon as the establishing gift is made, Jane recommends her first grant to support military children and families in our region. Jane itemizes on her taxes and claims a fair market deduction on the value of the donated business assets. The sale is not subject to any capital gains taxes.