Let’s say for example I have a company that is going to be acquired for $50m and I own half it as a cofounder.

How can I avoid a large tax hit?

I know someone who received $25m from an acquisition and walked away with $6m due to taxes and I want to avoid that nightmare.

All I know so far is that there is something to do with an S-Corp in a state with low/no capital gains tax…

Any other strategies to be aware of?

  • 2
    This feels more like a corporate accounting question and not personal finance. As such it is probably9 off topic for this site.
    – JohnFx
    Sep 24 at 0:00
  • Qualified small business stock (QSBS, also known as section 1202 stock) is something that might apply to you if you meet several requirements.
    – Stan H
    Sep 24 at 0:18
  • 2
    At the time of the acquisition there's nothing much you can do. At best, if you can plan long enough ahead, you can switch residency to a low-tax jurisdiction (e.g.: move from California to Florida), but high-tax jurisdictions will try to challenge that.
    – littleadv
    Sep 24 at 7:21
  • 1
    I am doing math and with Federal and state income tax on $25M, taxes should not be more than $12M, so one should walk away with 13M. You should ask your friend about details for major items and should add to your question
    – puzzled
    Sep 24 at 21:46
  • investopedia.com/terms/q/…
    – puzzled
    Sep 24 at 21:47

1 Answer 1


When you're talking about this amount if money, you really shouldn't be asking volunteers on the Internet for advice. You can't afford not to hire professionals.

  • 2
    Yeah, “hire a lawyer and accountant” is the obvious answer. (The follow-on is “why doesn’t he already have an accountant?”)
    – RonJohn
    Sep 24 at 19:02
  • 3
    @RonJohn: I'm guessing the answer is "because this is a hypothetical rather than an actual case."
    – keshlam
    Sep 24 at 20:05
  • Personal Finance should also include questions that human keeps contemplating . If one knows any points regarding this question, it should be answered till that points with caveats
    – puzzled
    Sep 24 at 21:44
  • Questions whose answers will never be useful to readers are generally considered offtopic on Stack Exchange. And not all finance is personal finance,.
    – keshlam
    Sep 25 at 9:38

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