Maximizing Profits

• Year: 2025
• Citation: Vol. 48 No. 1 Pg. 18
• Pages: 18

Maximizing Profits No. Vol. 48 No. 1 Pg. 18 Wyoming Bar Journal February, 2025

Maximizing Profits: StrategiOtof a Tax-Efficient I Sale of AppMiated Assets

by Tiffany T. House CAP®, CEPA, FCEP

The tax burden of selling highly annreciated assets can be overwhelming. However, there are numerous tax-advantaged strategies available for selling assets like closely held businesses and real estate. The best outcomes often arise when clients plan ahead.

Many business owners overlook the tax consequences when selling their business because they are focused on other complex aspects of the transition. Exploring tax-advantaged sale options may seem like a distraction, but it is crucial to optimize profits especially when they will likely be in a higher tax bracket the year of the sale.

Closely held businesses in the U.S. are often structured as S-Corporations, and most S-Corporation sales are structured as asset sales rather than stock sales because new owners do not want the lingering liability and want a step up in the basis of depreciable assets. This can result in some of the proceeds being subject to ordinary income taxes.

Real estate owners often fear paying capital gains tax upon sale. They may hold onto the property until death to benefit from the step-up in basis, limiting their ability to diversify and use the proceeds during their lifetime.

Fortunately, there are many tax-efficient tools to help individuals retain more of their hard-earned proceeds from the sale of a business, real estate, or other highly appreciated assets. These tools include both charitable and non-charitable options, as well as tax-deductible investments. The entity structure can impact which tools are viable.

Let's delve into some of these planning tools:

Charitable Tax Planning Tools

A Donor...