The most tax-efficient exit depends on your structure, but common strategies include:
- Structuring as a stock sale (if a corporation) to get favorable capital gains rates, versus an asset sale which often creates ordinary income.
- Qualifying for Section 1202 (Qualified Small Business Stock), which can exclude significant capital gains for C-corp stock held 5+ years.
- Using an installment sale to spread gain recognition over multiple years, reducing tax bracket impact.
- Considering an ESOP (Employee Stock Ownership Plan), which can defer or eliminate capital gains under Section 1042.
- Timing the sale around income and holding periods.
I’m not a tax advisor. Consult a CPA or tax attorney before deciding.