“Why didn’t my advisors tell me about that?”
Steve French, entrepreneur and business owner, feels called to good stewardship—not only in his businesses, but also in charitable giving.
Shortly after he sold a successful software company, he discovered that he had missed an enormous opportunity to reduce his tax burden and give more to a beloved ministry at the same time: Steve could have donated part of his business before it sold.
By donating part of the business early, he could have reduced his capital gains taxes, reduced his taxable income through the charitable tax deduction, and increased the value and impact of his gift.
His frustration at the missed opportunity to give more has led Steve to help others avoid his mistake. If you are in a similar position, with a business sale on the horizon and a heart to make an even greater difference in the world, this solution could be for you. With a little planning, you can minimize the dollars you send to the IRS and maximize the dollars you send to the nonprofits you love. Consider using a donor advised fund to donate a share of your business before the sale begins.
Here is a brief overview of The Signatry’s donor advised fund nonliquid giving process:
Step 1:
Before the business sale process begins, donate part or all of your business interest to a donor advised fund with The Signatry. The Signatry takes ownership of the donated asset.
Benefit #1: When you donate the business interest, you may receive a tax deduction for the fair market value of the donated portion, lowering your taxable income.
Step 2:
When the business is sold, the portion held in the donor advised fund at The Signatry will be liquidated, and the resulting cash in the fund balance may be granted to charities.
Benefit #2: Your capital gains taxes from the sale may be lower because you have already donated part of the business to The Signatry.
Benefit #3: The Signatry is a 501(c)(3) public charity and may be able to pay a much lower capital gains tax rate on the sale proceeds from the donated asset. This can leave a higher portion of the proceeds available for granting in the donor advised fund.
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