Part of a three-part series on a single founder’s liquidity event, told through planning, tax, and investments.
By the time Maya files the tax return for the year she sells her company, the most important decisions about that sale will already have been made—or missed. Maya is a composite of the founders we work with: a Californian who spent two decades building a closely held C corporation and is now approaching the exit. The return she eventually files will simply record choices she made months, and sometimes years, earlier. The founders who keep the most are rarely the ones with the cleverest return. They are the ones who acted deliberately while there was still time to change the answer.
After more than two decades working with business owners and multigenerational families, I have learned that the biggest tax opportunities are almost always time-sensitive. Maya’s exit shows what proactive planning looks like in practice, working backward from the moment she signs.
Years before the exit: Quiet, compounding savings
Hypothetical. In the years before she sells, Maya is a profitable business owner overpaying tax in two quiet ways: compensation set by habit rather than by plan, and no tax-advantaged retirement structure beyond a basic 401(k). Coordinated planning can calibrate her compensation deliberately, layer a defined-benefit or cash-balance plan on top of the 401(k) to shelter a substantial amount of income each year, and time income and deductible expenses across her related entities, such as the operating company and the LLC that holds the building it occupies.
No single one of these moves is dramatic. Together, repeated annually for years before the sale, they reshape a lifetime tax bill. The art is in the sequencing and the interaction between them, which is precisely the work that gets missed when a return is simply filed once a year by someone who never sees the rest of the picture.
The stock itself: Section 1202
Hypothetical. Because Maya built a C corporation, her shares may qualify as qualified small business stock under Section 1202, meaning the stock was acquired at original issuance, the required holding period is met, and the gross-asset and active-business tests were satisfied. If they qualify, a portion of her gain on the sale may be excluded from federal income tax, up to a per-issuer cap. The specific exclusion percentage and dollar cap depend on when the stock was issued and how long it is held, and these rules were modified by recent legislation, so they must be confirmed against current law for each shareholder.
The planning happens before the deal is signed. With lead time, Maya can sometimes expand the benefit by gifting shares to non-grantor trusts for family members, each potentially eligible for its own exclusion, a technique often called stacking. Wait until the term sheet is final, and most of that opportunity has already closed. This is the clearest argument for bringing the tax team in early: The most valuable move is frequently one that can only be made in advance.
Giving before the sale
Hypothetical. Maya also intends to support several causes for years to come. Done as annual checks written after the sale, that giving is far less efficient than it could be. Two coordinated moves change the math. First, she contributes a slice of her company shares to a donor-advised fund before the sale closes. Because the gift happens pre-sale, she avoids the capital-gains tax on that slice entirely and generally deducts the full fair-market value against her high sale-year income.
Second, the donor-advised fund then lets her grant to individual charities over many years on her own schedule, decoupling the tax benefit from the giving timeline. For a larger commitment, a charitable remainder trust can layer in an upfront deduction, defer gain on the contributed shares, and create an income stream back to her. The charitable intent is identical in every version; the structure determines how much tax efficiency comes with it, and the structure has to be in place before the sale, not after.
Why coordination changes the answer
Tax decisions never sit still. Gifting shares before the sale changes Maya’s estate plan and her family’s cost-basis picture. A Roth conversion in a low-income year interacts with Medicare premium surcharges and capital-gains brackets. The choice of entity affects income tax and estate tax at the same time. When the tax planner works in isolation, those second-order effects surface too late, usually on next year’s return. When the tax planner sits at the same table as the investment and estate teams, they get caught before they cost anything. Tax is not a service you bolt on at year-end. It is a lens that belongs on every major decision, handled forward rather than filed in arrears.
If you have questions about tax planning or want more information, visit our practice page or call 424-502-3500.
Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser; registration does not imply a certain level of skill or training. This material is for informational purposes only, is not personalized tax, legal, or investment advice, and should not be relied upon without consulting a qualified professional. “Maya” is a hypothetical composite for illustrative purposes only and does not represent an actual client. Qualified small business stock (QSBS) treatment under IRC Section 1202 depends on issuer, holding-period, and other eligibility requirements that vary by shareholder and must be independently verified; exclusion caps depend on issuance date and are subject to change. “Stacking” QSBS via gifts to trusts carries separate gift/estate tax considerations. Pre-sale charitable gifts of closely held stock (via donor-advised fund or CRT) are subject to IRS valuation, timing, and deduction-limit rules and generally require an independent appraisal; a CRT is irrevocable and its income stream is taxable to the donor. These strategies require qualified tax and legal counsel well before a sale. For our Form CRS, ADV Part 2, and registration status, visit www.adviserinfo.sec.gov or www.ceritypartners.com. ©2026 Cerity Partners LLC. All rights reserved.
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