05 Mar The Million-Dollar Tax Strategy Most Business Owners Miss Before They Sell
A conversation with Evan Lange
You’ve spent decades building something of real value. When the time comes to sell, the transaction itself will likely consume every available hour, with due diligence, negotiations, legal review and closing mechanics. That’s exactly when the most consequential financial decision of your charitable giving life is most likely to go unasked.
Most business owners who wanted to give generously end up giving far less than they could have, not because they lacked generosity but because nobody on their deal team raised the charitable question before the contract was signed.
In this episode of the StoryLens Podcast, StoryOne’s John Christensen and Cameron Bond are joined by Evan Lange, a charitable planning specialist with over a decade of experience helping families navigate presale charitable gifts. What follows is a practical guide for families considering a business sale, real estate transaction or other major liquidity event.
What is a presale charitable gift?
A presale charitable gift is the transfer of an appreciated asset such as business equity, real estate or private investments directly to a charitable entity before that asset is sold.
Instead of selling the asset, paying capital gains tax and then donating the after-tax cash, the owner gifts the illiquid asset first. The charitable entity then sells it, typically paying no capital gains tax. The result: the deduction is based on the full fair market value of the asset, the charitable vehicle receives more and the donor’s tax liability drops substantially.
This is not a gray area. It is a well-established strategy and one that most families who could benefit from it never execute simply because it wasn’t offered at the right moment.
Why is the timing of giving so important?
Once a binding contract to sell is signed, the window closes. The IRS looks at the economic substance of the transaction: if the seller has already committed to a sale, a subsequent transfer to a charitable entity will likely be treated as if the proceeds, not the asset, were donated. The tax benefit collapses.
Evan Lange has seen this play out repeatedly. Families arrive at his office after the close, generous in spirit, asking what they can do now. The honest answer is that the most powerful options expired when the purchase agreement was signed.
Presale planning can redirect millions in tax liability into charitable impact. Post-sale generosity, however sincere, cannot replicate that leverage.
When should families start thinking about presale gifts?
Earlier than they think.
Ideally, charitable conversations begin before letters of intent or binding contracts are signed. While rules can be nuanced, the earlier planning starts, the stronger the position.
Waiting until the eleventh hour limits options and increases risk.
When should families start the conversation?
Before any letter of intent is signed. Ideally, before a buyer has been formally identified.
The charitable design work — entity selection, asset analysis, valuation engagement and legal coordination — takes time. Compressing it creates risk. The rules governing what qualifies as a presale charitable gift are nuanced and the closer the charitable transfer occurs to the signing of a purchase agreement, the more scrutiny it will attract.
Evan describes one client who made a charitable gift of business interests on the morning of December 31st and signed the purchase agreement that same afternoon. The transfer was defensible, but just barely. That is not a position any family should engineer intentionally.
The earlier planning begins, the stronger the position. Families who think they may sell within the next one to three years should be having this conversation now.
Why do presale opportunities get overlooked?
Because key advisors are often focused elsewhere.
Deal attorneys focus on closing. CPAs focus on compliance. Without someone asking charitable questions early, planning gaps emerge. This is not malicious, it is structural.
Having the right voices in the room changes outcomes.
Which assets work best for presale charitable gifts?
The ideal candidate is a highly appreciated asset with a low cost basis and a long holding period that qualifies for long-term capital gains treatment.
Closely held business interests are the most common. Private real estate, venture capital investments, private equity holdings and other illiquid private investments can also qualify. The key factor is embedded gain — the larger the spread between cost basis and fair market value, the greater the potential tax benefit of the charitable transfer. For entrepreneurs, it’s common to sell a business that has zero or near-zero basis.
Not every asset is a good candidate. Entities with significant debt, operating losses, accumulated deferred revenue or UBIT exposure require careful analysis before a charitable transfer. The presence of cash inside an entity can also complicate the structure. Asset selection is not a mechanical exercise; it requires the same rigor as the transaction itself.
Why do so many families miss this window?
The answer is structural, not malicious.
M&A attorneys are focused on getting the deal to close on favorable terms. CPAs are modeling the tax impact of the transaction for the seller, the entity and the buyer. Investment bankers are running their process. Every professional on a typical deal team is executing their lane with precision.
Nobody’s lane is asking: “Have we fully explored what this family wants to give and have we built a structure to maximize that generosity before the sale?”
That question belongs to a different kind of advisor — one whose job is to see the whole picture from the seller’s point of view, not just the transaction. Without that voice in the room, the charitable opportunity is simply never raised. It is a planning gap born of deal momentum, not bad intent.
What charitable structures are typically used?
The most common vehicles are donor-advised funds (DAFs), private foundations, supporting organizations and operating charities. Each has distinct tradeoffs and in some cases families use multiple structures in concert.
DAFs are the most tax-efficient option for most sellers. They qualify as public charities, which means the deduction for gifts of appreciated property is based on fair market value rather than cost basis. Setup is fast, administrative costs are low and the vehicle can accept complex assets. The tradeoff is reduced operational control: the sponsoring organization holds legal title and makes grants on the donor’s recommendation.
Private foundations offer maximum control. The family directs all grantmaking, sets its own investment policy and can employ family members in governance roles. The tradeoff is significant: deductions for gifts of closely held business interests are typically limited to cost basis rather than fair market value. This makes private foundations a poor primary vehicle for presale gifts of certain appreciated assets. They can work well as a recipient for publicly traded stocks or cash once liquidity has been established.
Entity selection should be driven by the family’s charitable goals, the type of asset that is being gifted and the mechanics of the transaction — not by prestige.
What happens after the gift is made?
When the sale closes, the charitable entity receives its allocated share of the proceeds. If a DAF was used, those funds are now available for grants to qualified nonprofits. If a private foundation holds assets, they must be deployed according to the foundation’s governing documents and minimum distribution requirements of 5 percent annually.
Many families at this stage face a question they have rarely had to answer with this kind of specificity: Where do we actually want to give? In what amounts? Over what time horizon? Across which causes or organizations? How should we structure the succession of this charitable work? Do we want to make anonymous gifts, or are we comfortable receiving credit for charitable gifts?
Some families distribute all proceeds within a few years. Others establish an endowment model, investing the charitable pool and granting from returns so the capacity to give extends across generations. Both approaches are legitimate. The choice should follow the family’s charitable philosophy, not default to whatever seems simplest at closing.
Generosity requires ongoing stewardship. The transfer is the beginning, not the conclusion.
Is a valuation required when I make a presale charitable gift?
Yes. For charitable gifts of non-publicly traded assets above certain thresholds, the IRS requires a qualified appraisal completed by an independent third party. This valuation establishes the fair market value of the gifted interest, which determines the allowable charitable deduction. The appraisal is attached to the relevant tax return.
Depending on asset complexity, the cost of a qualified appraisal typically ranges from $5,000 to $15,000. Skipping or shortcutting this step is one of the most common and expensive errors families make.
How does StoryOne guide families through a presale charitable gift?
The families we work with most effectively are those we’ve come to know before a transaction is on the horizon. When we understand a family’s mission, values and long-term goals, charitable planning becomes a natural extension of everything else we’re doing together, not a last-minute add-on.
We also work with families who come to us mid-process, with a letter of intent signed or a close date approaching. In those situations, we move quickly, assessing what’s still possible, coordinating with M&A counsel, tax attorneys, CPAs and charitable platform providers and implementing what the timeline allows.
Our HeartLens process is designed to help families answer the harder question that comes after the mechanics are resolved: not just how to give, but what they’re giving toward and why. Aligning charitable strategy with a family’s mission, vision, values and goals is what transforms a tax strategy into a lasting legacy.
Our role in a presale charitable gift typically includes three phases: charitable design, coordination with the professional team and implementation and follow-through.
If you are considering a sale, the time to act is now
Presale charitable planning is not complicated to initiate, but it is time-sensitive. The earlier a conversation begins, the more options a family has. Once a binding contract is signed, many of those options are gone permanently.
If you or someone you know is working through a business sale, a real estate transaction or a significant liquidity event and has not yet had a conversation about presale charitable strategy, we want to hear from you. Reach out to StoryOne at (913) 544-0600 or email hello@story-one.com.
The best time to plan for generosity is before the moment demands it.
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