The 7 Planning Moves That Vanish Once the Deal Closes
A sale has two numbers. The one printed on the term sheet, and the one you keep. The distance between them is decided well before the closing table — in the twelve to thirty-six months before a buyer exists, while the company is still private, still illiquid, and still cheap to move.
The letter of intent is the hinge. Two doctrines render planning futile once a sale is a practical certainty, whatever its legality. Under the anticipatory assignment-of-income doctrine, the law treats a transfer of stock as a transfer of the proceeds, and taxes the transferor accordingly. Under the step-transaction doctrine, a sequence engineered to reach a result is collapsed into that result. Together they turn the test on the moment the outcome stops being in doubt, rather than the moment you sign. An executed LOI is usually that moment.
Seven moves live inside that window. Each is ordinary, established, and available to any owner who acts before the company becomes a transaction. Ordered by the leverage they carry:
The seven moves are OnePoint BFG's own synthesis of established pre-transaction planning techniques under the Internal Revenue Code and related case law, rather than a single external source. Authorities for the specific figures and rules appear in the notes below.
1. Move the equity into trust before the valuation runs. A minority interest in a private company is worth less than its pro-rata share of the whole — discounted for illiquidity and lack of control. Gift or sell that interest into an irrevocable trust — a grantor-retained annuity trust, an intentionally defective grantor trust, a spousal lifetime access trust — while those discounts are large, and every dollar of later appreciation, the entire acquisition premium included, compounds outside your taxable estate. In 2026 the federal exemption is $15 million per person and permanent; the rate above it is forty percent. An executed LOI collapses the discounts and reprices the gift at deal value. The same shares, transferred weeks later, consume a multiple of the exemption they would have consumed before.
2. Multiply the Section 1202 exclusion before the shares change hands. Qualified small business stock lets a shareholder exclude up to $15 million of gain per issuer from federal tax — a figure that resets for each taxpayer who holds the stock. Distribute qualifying shares to several non-grantor trusts before a sale and each carries its own exclusion; one founder's single shield becomes many, and a large share of the gain leaves the federal base entirely. The stock must qualify: a domestic C corporation, under the $75 million gross-asset ceiling, in an active business the statute favors — one that pointedly excludes finance, law, consulting, and most services. Gift after the deal ripens and the step-transaction doctrine folds the trusts back into you.
3. Give the appreciated stock away before it becomes cash. Contribute shares to a donor-advised fund, a charitable remainder trust, or a charitable lead trust before signing, and two benefits arrive together: a deduction at the stock's full fair-market value, and a sale by the vehicle free of capital-gains tax. Make the same gift the day after the LOI and the assignment-of-income doctrine hands the gain back to you — you will have surrendered the stock and paid the tax on it both. This is the sharpest edge of the window, and the most expensive to miss.
4. Change your domicile before the gain is recognized. State tax is the largest cost most owners overlook, because it is governed by a single fact: where you live when the gain is recognized. A California resident pays up to 13.3 percent, the state taxing the gain as ordinary income with no preferential rate; a resident of Florida, Texas, Nevada, or Tennessee pays nothing. But domicile is a question of fact — where you vote, bank, and keep the center of your life — rather than a mailing address, and high-tax states audit departures for years. It cannot be manufactured in the quarter before a closing. This is a move measured in years rather than months.
5. Fix the structure before the term sheet fixes it for you. Whether the transaction is a sale of stock or of assets, whether the gain is capital or ordinary, whether a reorganization is used to hand the buyer the clean entity it wants — the term sheet settles all of it. Restructure beforehand and you govern the character of the gain. Wait, and you inherit whatever structure serves the buyer, frequently an asset purchase that converts part of a capital gain into ordinary income taxed at nearly double the rate.
6. Architect the proceeds; do not merely receive them. How you are paid dictates when and how you are taxed. An installment note spreads gain across years instead of recognizing it all at once; escrows, earnouts, and rollover equity determine whether you owe tax on money not yet in hand. These are terms — negotiated into the agreement, or forfeited. All cash at close is the simplest arrangement and routinely the costliest.
7. Insure the estate before the estate — and you — grow harder to cover. A completed sale converts an illiquid company into a large, exposed, taxable estate. Permanent life insurance held in an irrevocable trust funds the estate-tax liability that sale creates, and holds the proceeds outside the estate it exists to pay. The best time to secure coverage is early. Premiums are lower, underwriting is simpler, and options are broader. Wait until both your balance sheet and your age have grown, and coverage becomes more expensive, more complicated, and sometimes unavailable at any price.
This is ordinary machinery — the standard work of a sale run well — and its one binding constraint is time. Begin at the term sheet and you are reacting to the transaction rather
than planning it. The number you keep is set long before the wire arrives — and once the door closes, the difference is permanent.
Investment advisory and financial planning services offered through Bleakley Financial Group, LLC, an SEC registered investment adviser, doing business as OnePoint BFG Wealth Partners (herein referred to as "OnePoint BFG"). For more information regarding OnePoint BFG including important disclosures, please visit adviserinfo.sec.gov.
The third-party information contained herein is provided for informational and discussion purposes only. OnePoint BFG does not represent this third-party information as its own. While OnePoint BFG has gathered this information from sources deemed to be reliable, OnePoint BFG has not reviewed or verified any information input by your financial professional or that of the third-party source, nor can OnePoint BFG guarantee the completeness or accuracy of this data.
OnePoint BFG does not offer legal or tax advice. This document is not a substitute for the advice of a qualified attorney or tax professional. You should not take any action based solely on the information provided on this report without seeking legal counsel from a licensed attorney or tax professional in your jurisdiction. No attorney-client relationship is formed by your use of this document. This communication has been provided for general informational and discussion purposes only, and should not be considered as investment, legal or tax advice or as a recommendation. Circular 230 notice: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any tax advice included in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of avoiding any federal tax penalty or promoting, marketing, or recommending to another party any transaction or matter.
OnePoint BFG often uses Artificial Intelligence ("AI") in the generation of marketing and advertising and has established policies to ensure all AI generated material goes through human review prior to dissemination.
The seven moves are OnePoint BFG's own synthesis of established pre-transaction planning techniques under the Internal Revenue Code and related case law, rather than a single external source. Authorities for the specific figures and rules appear in the notes below.
Federal estate, gift, and generation-skipping transfer tax exemption of $15 million per individual for 2026 (indexed thereafter), with a 40% top rate: Internal Revenue Code (IRC) §2010(c), as amended by the 2025 budget reconciliation act (P.L. 119-21); see IRS estate- and gift-tax guidance.
Qualified small business stock requirements — a domestic C corporation, the $75 million aggregate gross-asset limit, and the excluded businesses (finance, law, consulting, and other services): IRC §1202, including §1202(d) and §1202(e)(3), as amended by P.L. 119-21.
Charitable contribution of long-term appreciated stock: a fair-market-value deduction and no capital-gains tax on the appreciation under IRC §170(a) and §170(e)(1). The deduction is disallowed and the gain attributed to the donor where a sale is a practical certainty when the gift is made (anticipatory assignment of income; Rev. Rul. 78-197).
Top state rates on the gain, per the respective state revenue departments: California taxes the gain as ordinary income at up to 13.3%; Florida, Texas, Nevada, and Tennessee impose no comparable tax.
Life insurance proceeds are included in the insured's taxable estate unless the policy is held without incidents of ownership, typically through an irrevocable life insurance trust: IRC §2042; see also IRC §2010(c) (estate tax exemption).
Section 1202 qualified small business stock. Figures reflect amendments made by the 2025 budget reconciliation act (P.L. 119-21), generally effective for stock acquired after July 4, 2025: IRC §1202.
Section 1202 eligibility: original issuance of stock in a domestic C corporation (IRC §1202(c)); the $75 million aggregate gross-asset limit (IRC §1202(d), as amended by P.L. 119-21); and the 80% active-business requirement and excluded fields (IRC §1202(e)).
Tiered gain exclusion of 50% / 75% / 100% at three / four / five years: IRC §1202(a). The taxable portion is subject to the 28% rate under IRC §1(h) and the 3.8% net investment income tax under IRC §1411; alternative-minimum-tax treatment under IRC §57, as amended.
Per-taxpayer, per-issuer exclusion cap — the greater of $15 million or ten times adjusted basis: IRC §1202(b), as amended by P.L. 119-21.
The exclusion cap applies per taxpayer (IRC §1202(b)); gifted QSBS retains its character and the donor's holding period in the donee's hands (IRC §1202(h)). Transfers that are merely steps in a pre-arranged sale may be collapsed under the step-transaction doctrine (see Gregory v. Helvering, 293 U.S. 465 (1935)).
The five-year holding period runs from the date of issuance (IRC §1202(a), (c)), and the aggregate gross-asset test is applied at and immediately after issuance (IRC §1202(d)); a conversion to C-corporation status that issues new stock therefore starts a new holding period and asset-test measurement.
Fair-market-value deduction for long-term appreciated property given to a public charity, with no capital-gains tax on the appreciation: IRC §170(a) and §170(e)(1).
A contribution of appreciated securities is not a sale by the donor, so the unrealized gain is not recognized, provided the transfer is complete before any sale is a practical certainty: IRC §170; Rev. Rul. 78-197.
Donor-advised funds: IRC §170(f)(18) and §4966. Charitable remainder trusts: IRC §664. Charitable lead trusts: IRC §170(f)(2)(B) and §2522(c)(2).
The 0.5%-of-AGI floor on itemized charitable deductions and the 35% cap on the value of itemized deductions for top-bracket taxpayers, effective 2026: P.L. 119-21. The 30%-of-AGI limit for gifts of appreciated property to public charities: IRC §170(b)(1)(C).
Anticipatory assignment-of-income doctrine: income is taxed to the person who controls its realization even where the underlying asset is transferred first (Helvering v. Horst, 311 U.S. 112 (1940); Ferguson v. Commissioner, 174 F.3d 997 (9th Cir. 1999)). A charitable remainder trust must not be legally bound to sell to a pre-arranged buyer (Rev. Rul. 78-
OP 26-0787
