Buying or selling a business? You can do it through a Donor Advised Fund

Capstone Legacy Foundation offers vehicles for managing your sale to optimize charitable giving while minimizing taxes.

Here’s how it works:

  1. Before buying or selling your business, open a Donor Advised Fund (DAF) in your name. Capstone will work with your wealth advisor and other trusted professionals (attorneys, accountants, etc.) to map out the details.
  2. After setting up your DAF, you donate a non-voting interest in the business to your DAF before the sale.
  3. This allows you to:
    • Receive a substantial tax deduction,
    • Reduce/ eliminate capital gains taxes on the gifted interest, and
    • Convert those tax dollars into more giving to your favorite charities.

Real Life Example

Phineas (not his real name) was a successful businessman. One year, wanted to buy an investment property that generated around $100k in positive cash flow per year. Before buying the property, Phineas formed a holding company with Capstone. Then he bought the property for 20% down and donated 99% of the financial ownership to Capstone while keeping 1% for himself. The 1% share he kept had ALL the voting rights. This arrangement allowed him to run the investment as he saw fit. And then he could sell the asset whenever he was ready. By purchasing his property this way, he received an immediate and maximum tax deduction for the charitable gift.  Moreover, by eliminating income tax on earnings from the donated portion of the company, he greatly enhanced his operating cash flow.