Challenge
A married couple (and high-school sweethearts) started their own business, built it, and sold it for over $10 million with a cost basis close to zero. They have been clients of ours for over 20 years. Their primary issue was avoiding a huge tax bill on the sale.
SOLUTION
We set up and managed a Donor Advised Fund for the couple, in which they contributed a portion of their highly appreciated stock. By doing so they claimed itemized deductions on their federal and state income tax returns. They also used the market value of the securities to deduct up to 30% of their adjusted gross income as a carry forward for the next five years.
RESULTS
The Donor Advised Fund significantly reduced the taxes triggered by their company’s sale. It also provided a vehicle for the family to fund their favorite charities. And, rather than using their checking account to contribute to church and charity, as they had previously, they set up an automatic debit plan from their Donor Advised Fund, which now grows tax-free as they continue to give.
Every client has a unique story. Your plan and results may differ.