Case Study: A $3 Million Business Sale, 2 Owners (Married Couple)
Meet the Owners
Two married business owners had just sold their company for $3 million. They were set to receive their payout by the end of the year but were staring down a $600,000 capital gains tax bill.
The Problem
Without a plan, this couple would have to pay $600,000 in capital gains taxes all at once in 2024.
The Game Plan
After a short meeting with this couple, we realized their business was set up as a C-Corporation, which gave them some unique tax planning opportunities. After walking them through some of that, they introduced us to their CPA, and here’s how we helped them turn things around:
Spread Out the Sale Proceeds: Instead of taking the full $3 million upfront, we worked with their CPA to spread $1.5 million of the sale over five years using a tax-advantaged plan.
Lowered Their Tax Rate: By spreading out the payments, they kept their capital gains tax rate at 15% instead of jumping to 20%.
Used the Plan to Cover Taxes: Instead of paying $600,000 out-of-pocket in taxes, they paid just $60,000 themselves, and the plan covered the remaining $540,000.
What Changed
Big Tax Savings: They reduced their immediate tax burden by $540,000. Instead of writing one massive check to the IRS, their tax payments were spread out over five years.
More Monthly Income: Starting two years after selling the business, their monthly income went up from $24,000 to more than $28,000 - an extra $4,000+ every month (a 16% increase). Over 19 years, this added up to $1 million in extra income.
Peace of Mind: They avoided a huge one-time tax hit and spread their tax payments over time, keeping more money in their pockets. With the CPA’s approval and oversight, they felt confident in the plan and its benefits.
The Bottom Line
Thanks to this strategy, these business owners:
Saved $540,000 in taxes.
Increased their monthly income by more than $4,000.
Set themselves up for a more secure financial future.
If you’re looking for ways to keep more of your hard-earned money after selling a business, this is a great example of how the right plan can make a big difference.
Let us know when you’re ready to see how we can structure a plan for you - at no charge.
