SO YOU JUST SOLD YOUR BUSINESS, NOW WHAT?: MINIMIZE YOUR TAXES

Minimize Your Taxes on the Sale

One of the major considerations connected with the sale of your business concerns minimizing taxes that result from the disposition. Here are 10 ways to do this:

Structure the Transaction Beneficially
If you are getting stock instead of cash from the sale of the company, you should be able to receive the stock tax-free if you structure the transaction properly. Make sure you have an experienced corporate and tax lawyer to ensure proper tax treatment.
Seek Capital Gains Treatment
Capital gains on the sale of stock receive much better tax treatment than ordinary income tax treatment. So review with your tax advisor the types of payments you are to receive under the sale. Perhaps you can optimize tax treatment by reconfiguring the payment. For example, you may decide that a two-year, $200,000 consulting agreement after the sale is not as advantageous as a higher purchase price and lower consulting payments.
Take a Loss on Other Investments
Prior to year-end, consider selling a losing venture or losing stock to offset some of those gains from selling your business.
Consider Tax-Free Investments
Returns are not very high, but if you are looking for a safe, tax-friendly investment, consider investing some of your money in tax-free government or municipal bonds for at least a portion of your portfolio. This is particularly advantageous for a high-income individual.
Remember Charitable Donations
While donations should not be made simply for tax purposes, but rather for philanthropic reasons, you can always make a couple more at year-end to lower your tax bite. Remember to get receipts.
Consider Gifts
As of 2015, you can give up to $14,000 a year away tax-free to each person you choose. (By splitting their gifts, married couples can give up to twice that amount.) You may even be able to give more by using your lifetime amount of $5,430,000 per Internal Revenue Code Section 2501.
Max Out Your IRA or Other Retirement Plan Contributions
This is a legitimate way to lower your taxes for the year, so make sure you have taken advantage of IRA or other retirement plan contributions that you are allowed to make.
Prepay Your State and/or Local Taxes
If you are fairly certain that your personal income tax bracket will not be higher next year, and you are not affected by the alternative minimum tax, you can make state and/or local tax payments before the end of this year so you can take a deduction this year.
Pay Your January 1 Mortgage Payment Early
If you pay your January 1 mortgage payment on or before December 31, you can take an additional deduction for interest paid. Remember to add the interest amount to the amount reported by your lender when they send you the 1098 form.
Defer Income
Unless you have reason to believe that next year will bring you a higher income and move you into a higher personal income tax bracket, you may want to defer income until after the first of the year. If you are self-employed, for example, send the last invoices out late in December so you will more likely receive payment in January.