#succession-planning
Strategies for transferring business ownership and leadership to ensure long-term continuity
A Quality of Earnings (QoE) report decides whether a buyer accepts your EBITDA or re-trades the deal price. This guide breaks down the 12 add-backs buyers accept, the 8 they reject, and how the working capital peg quietly cuts seller proceeds at closing.
Section 2032A lets executors value qualifying farm or closely held business real property at productive use rather than fair market value, with a 2026 reduction cap of $1,460,000 — worth up to $584,000 in federal estate tax at the 40% rate. The election is irrevocable, requires material participation, and triggers a 10-year recapture period.
A side-by-side comparison of Electing Small Business Trusts (ESBT) and Qualified Subchapter S Trusts (QSST) under Section 1361, including who pays the tax, the 2-month-and-16-day election window, and a worked example showing a $118,000 annual tax swing between the two structures on $1M of K-1 income.
A trust holding S-corporation stock must qualify as a QSST or ESBT under Section 1361 or the S election terminates retroactively. A QSST taxes pass-through income at the single beneficiary's personal rate; an ESBT permits multiple beneficiaries but traps S-portion income at the 37% top trust rate. The election deadline is two months and sixteen days from the triggering event.
A practical 2026 guide to Family Limited Partnership valuation discounts — how high-net-worth families combine 10–25% lack-of-control and 20–35% lack-of-marketability discounts to cut estate and gift tax exposure, with worked numerical examples, the IRC Section 2036 traps that have collapsed estates in Tax Court, setup costs, and the bookkeeping required to defend the structure on audit.
For 2026 the One Big Beautiful Bill Act sets the GST exemption at $15 million per person ($30 million per couple), with a flat 40 percent rate on transfers to skip persons; this guide covers skip-person rules, direct skips, taxable terminations, automatic versus elective exemption allocation, and how dynasty trusts achieve a zero inclusion ratio.
How the Intentionally Defective Grantor Trust (IDGT) installment sale freezes estate value at today's AFR, why Revenue Ruling 2023-2 ended the basis-step-up shortcut for grantor trust assets, and the formalities that decide audit outcomes.
Three valuation approaches — asset, income, and market — can produce 50% differences in indicated value for the same closely-held business. This guide explains when each fits, how DLOM and DLOC discounts apply, and what records owners need before a sale, partner buyout, or estate transfer.
How IRC Section 453 and Form 6252 let sellers spread capital gain on seller-financed real estate or business sales across the years payments arrive — including the gross profit percentage formula, the depreciation recapture trap, the Section 453A interest charge on installment balances above $5 million, and when to elect out.
How executors of closely-held business estates use IRC Section 6166 to defer federal estate tax across 14 years at a 2% rate, with the 2026 inflation-adjusted $1.94M base, the 35% eligibility test, election mechanics, and the acceleration events that kill the deferral.
Section 1042 of the IRC lets a C-corporation owner selling shares to an ESOP defer federal capital gains tax indefinitely — and potentially eliminate it through step-up at death. This guide covers the five qualifying conditions, what counts as Qualified Replacement Property, the floating-rate-note diversification strategy, and the trade-offs founders should weigh against a strategic sale.
Key person life insurance pays the company, not the family, when a founder, rainmaker, or specialist dies. IRC Section 101(j) makes the death benefit taxable unless written notice and consent are completed before the policy issues — a step most small businesses skip, turning a $1M tax-free benefit into roughly $600K–$700K after tax.
