If you are planning to sell a business, real estate, or other highly appreciated assets, the way you structure that transaction can make an enormous difference in what you ultimately keep. A lump-sum sale may feel straightforward, but it can expose you to significant capital gains taxes — sometimes at the highest possible rates.

The good news: there are several proven strategies designed to spread or defer that tax liability, protect your legacy, and keep more of your wealth working for you and your family.

The Cost of a Lump-Sum Sale

Consider a married couple selling an asset generating $2 million in capital gains. Taking that as a lump sum could result in a total tax bill of $414,540 — with much of the gain taxed at the 20% long-term capital gains rate, plus the 3.8% Net Investment Income Tax (NIIT) on amounts over $250,000.

By contrast, deferring that same $2 million over 5 years at $400,000 per year, the total tax drops to $230,175 — a savings of $184,365, or 44%.

Below is an overview of eight key strategies our team regularly employs to help clients minimize taxes on the sale of appreciated assets.

The 8 Key Strategies

1- Installment Sales

For use with: business, real estate
Spread capital gains over multiple years using either a direct or structured installment sale, keeping more income in lower tax brackets each year.

2- IRC Sec. 1062 Farmland Sales

For use with: farmland property
Under the new tax law enacted July 4, 2025, farmers selling qualified farmland to other qualified farmers can defer capital gains through four equal annual installments, while still receiving full proceeds upfront. Available starting January 1, 2026.

3- Exchanges (1031, 721, DST)

For use with: real estate
Defer capital gains by reinvesting sale proceeds into a like-kind property via an IRC 1031 Exchange, 721 Exchange, or Delaware Statutory Trust (DST).

4- Charitable Remainder Unitrust (CRUT)

For use with: securities, business, real estate
Tax-deferred sale proceeds fund a trust that distributes income to beneficiaries over a specified term, with remaining assets passing to qualified charitable organizations at the end.

5- Qualified Opportunity Zone Fund

For use with: securities, business, real estate
Investing sale proceeds into economically distressed regions through a Qualified Opportunity Zone Fund can result in significant preferential tax treatment on capital gains.

6- IRC Section 1202 — Qualified Small Business Stock

For use with: C corporations
Founders of C corporations may exclude up to $15 million (annually inflation-adjusted) or 10x their basis in stock from income taxation on the sale of qualified small-business stock held more than five years — recently enhanced under the OBBBA.

7-Employee Stock Ownership Plan (ESOP)

For use with: business
A tax-deferred method to sell a business to employees through a qualified retirement plan structure, with financing available through commercial banks if needed.

8- Tax-Deductible Accredited Investments

For use with: business, real estate, securities
Certain accredited investments in oil, green energy, real estate, and equities may allow up to 90% of the initial investment to be deducted in the year of investment — potentially offsetting or eliminating taxes due from the sale of another asset that same year.

Key Questions to Consider

Selecting the right strategy depends on your specific situation. Here are the questions your advisor should be asking:

1. What type of assets will be sold?
   
2. Are there any outstanding liabilities attached to the asset?
   
3. How much of the sale represents depreciation recapture, capital gains, and cost basis?
   
4. How much capital is needed in year one, and how much could be deferred?
   
5. What will be the ongoing annual adjusted gross income (AGI), excluding the sale?
   
6. Is there a need to replace the income lost from the sale? If so, how much?
   
7. If the asset is a business, how is the entity taxed (C corp, S corp, etc.)?

If you are considering the sale of a business, real estate, or other significant asset, it is critical to plan ahead. The right strategy — implemented before the sale closes — can save you hundreds of thousands of dollars and position your wealth for lasting impact.

Our team is here to walk you through every option and help you identify the approach that best fits your goals.