A dated list of exit decisions, each priced in tax, comes out of business exit planning at Apollon Wealth Management for owners whose wealth sits mostly in the company. Most owners need a runway of two to five years ahead of closing. The terms with the hardest tax deadlines are asset versus stock sale, any rollover equity and the closing date, and all of them get set before anyone signs the letter of intent.
Most owners we meet have put this off for years. The company paid well, the next quarter always needed attention, and the exit stayed a vague idea. Then a banker's email, a buyer's term sheet or a son's offer to buy in ten annual payments arrives, and the question has a deadline.
When most of your net worth is the company you plan to exit
Business exit planning turns the exit into a short list of decisions in deadline order: the offer's structure, any rollover equity, the closing year, the retirement account and the estate documents. Each decision gets its tax cost estimated before anyone signs. Rule of thumb: once the company is more than half your net worth, the exit plan comes before any portfolio question. For the hypothetical Gus and Deborah, the company is about $6 million of roughly $6.7 million, close to 90 percent.
Where does exit planning stop and sale tax, succession or post-sale investing begin?
Exit planning sets the order and the deadlines that connect three neighboring questions, and it doesn't answer them in full. Business sale tax planning prices the deal terms, such as price allocation on Form 8594 and equipment recapture. Family business succession decides whether your son takes over and how control passes. Wealth after a business sale covers investing the proceeds.
What age and which tax year set the rules for your exit?
Your closing year and your age set most of the rules, because the gain generally lands in the year the sale closes and Medicare reads income from two years earlier. Four checks come up in nearly every plan we build.
The gain is generally capital gain to the extent it reflects capital assets. In an asset sale, the price paid for depreciated trucks, mowers and trailers is recaptured as ordinary income, up to the depreciation already taken. Buyer and seller both report the allocation on IRS Form 8594. Moving price toward capital assets, with support for the values, actually saves tax, because it changes the rate.
The gain generally lands in the closing year, so a closing that slips from December to January moves it a full tax year. Medicare premiums read MAGI from two years earlier, so a sale while Gus is 63 shows up in his premiums at 65. For 2026, the CMS total Part B premium ranges from $202.90 to $689.90 per month. Deborah, at 60, has more room.
The $700,000 SEP-IRA is taxed as ordinary income when withdrawn. Both spouses were born in 1960 or later, so under IRS rules their RMDs start at 75. The 2026 estate tax exclusion is $15,000,000 per person, so at about $6.7 million estate tax isn't what drives their plan. The basis step-up at death matters more, because it is the only thing that erases a deferred gain.
If shares go into a trust for the son, the trust can hold S corporation stock only as a grantor trust or with a timely QSST or ESBT election. Otherwise the S election can end. And under section 2703, a family buy-sell price that isn't arm's length can be disregarded for estate tax purposes.
Character of the gain and the closing year
Accounts, estate and family trusts
Rule of thumb: if a move only changes the year the tax is paid (rollover equity, a seller note, a SEP deduction), count the full tax as still owed. Only moves that change the rate, shrink the gain or reach a step-up at death actually save tax.
How much of a $6 million offer stays with Gus and Deborah, and why does Merle's answer differ?
Of a $6 million offer, Gus and Deborah can count only $3,904,000 as spendable, and Merle, with the same question, starts somewhere else entirely. The check for every move is the same: does it change the rate, the amount of gain, or only the year the tax is paid?
A hypothetical couple, Gus and Deborah, 63 and 60, own a commercial landscaping company with 40 employees. The private-equity offer is $6 million: $4.8 million in cash plus $1.2 million rolled into the buyer's new holding company (20 percent). Assume a $400,000 basis and, for illustration, a flat 20 percent rate on all gain, ignoring recapture, state tax and the 3.8 percent surtax. Basis splits the same way the price does: $320,000 against the cash and $80,000 against the stake. Gain on the cash is $4.8 million minus $320,000, or $4.48 million, and the tax is $896,000. The stake's $1.12 million gain isn't taxed at closing, which postpones $224,000. If the stake later sells for $2.4 million, the gain is $2.32 million. That tax is deferred, not saved.
So they count $3,904,000 as spendable ($4,800,000 minus $896,000) and treat the rolled stake as a bet whose value may go up or down. The rolled equity can lose value, and no return is certain. Before the letter of intent, they asked the deal attorney to confirm in the documents that the rollover is structured as tax-deferred. Without that confirmation, signing a 20 percent rollover to keep skin in the game could cost them about $224,000 more at closing, paid in cash for a stake they can't sell. Their son's ten-year purchase gets priced next, on the same after-tax basis.
Merle (hypothetical, 68, widowed machine shop owner) asks the same question and gets a different answer. His estate is about $3.4 million ($2.5 million shop plus $900,000 in IRAs), far below the exclusion. He was born before 1960, so his RMDs start at 73. His first decision is when an employee sale closes relative to his first RMD, since both land as income. Gifting shares would pass his low basis to his daughters without a step-up, and that is a topic for its own page.
Only the cash row below carries tax due at closing. The SEP-IRA row is where the years after closing matter.
What Gus and Deborah decided
Merle's different starting point
| Account or asset | How it is taxed | What to do with it |
|---|---|---|
| Cash at closing $4,800,000 | Capital gain in closing year | Set aside $896,000 first |
| Rolled equity $1,200,000 | Deferred until the next sale | Don't count it as spendable |
| SEP-IRA $700,000 | Ordinary income; RMDs at 75 | Draw in low-income years |
| Son's ten-year note (alternative) | Gain taxed as payments arrive | Compare after tax with PE cash |
Before a buyer's banker calls: what to do alone, and when Apollon Wealth Management comes in
If this is you (company worth more than half your net worth, exit within five years), start alone: pull three years of company returns and the depreciation schedule, list every account with its balance and tax treatment, and write down the after-tax amount you need to stop working. Call Apollon Wealth Management when a term sheet names a price, rollover share or seller note, or when an exit is three years away or less and no buyer has appeared. We work with your CPA to estimate each term's tax cost, by video or phone. The minimum is $500K in investable assets, and every fee is in the client agreement. Apollon Wealth Management serves 528,000 clients with $7.1 billion in client assets as of 10/12/2026. An exit plan doesn't value the company or draft the purchase agreement; the appraiser, deal attorney and CPA do that, and an owner ten years out needs only records and account titling.
Count a deferred tax as still owed; only moves that change the rate, shrink the gain or reach a step-up actually save it.
Your questions about business exit planning, answered
What happens if the private-equity firm sells the company again before we're ready to sell our rolled equity?
Your rolled equity is usually sold or diluted on the terms in the buyer's documents, and a second sale can trigger the deferred gain. Ask the deal attorney what drag-along and exit rights apply before signing. Treat the stake as value that can fall as well as rise.
If our closing slips from late December into January, which tax year gets the gain?
The gain generally lands in the year the sale closes, so a January closing moves it into the next tax year. That can change your bracket, your Medicare premiums two years later and when estimated taxes are due. Confirm the closing date with your CPA before you commit to one.
Is taking a 20 percent equity rollover better than taking the whole price in cash?
Neither is better in general. A rollover postpones tax, on $1.2 million in the example about $224,000 at an illustrative 20 percent rate, but it doesn't remove it, and the stake can lose value. Cash is certain at closing. Compare both after tax before choosing.
Will selling the company force us to cash out our SEP-IRAs?
No. A sale doesn't force withdrawals from a SEP-IRA. It is taxed as ordinary income only when you take money out, and under IRS rules required distributions start at 75 for people born in 1960 or later. A big sale year is usually a poor time to draw extra.
How much of our net worth sitting in the company means an exit plan can't wait?
Once the company is more than half your net worth, the exit plan comes before portfolio questions. In the hypothetical example, the company is close to 90 percent of net worth. If an exit is within five years, start now.
Do we owe estate tax on the business if one of us dies before the sale closes?
Probably not at this size. The 2026 federal estate tax exclusion is $15,000,000 per person, so a $6.7 million estate is well under it. The basis step-up at death matters more, since it can erase deferred gain. State rules differ, so check yours.
Read the rules at the source
This content is general information only and does not constitute investment, tax or legal advice tailored to your circumstances. Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. Consult a qualified professional before making any financial or legal decision.