She Sold Her Business and Turned a Tax Crisis Into a Decade of Giving

Jamie built her business from her garage. Thirty-five years of early mornings, late nights, and everything in between. When she finally sold for $2.5 million, it should have been the celebration of a lifetime.

Instead, she was staring down a tax nightmare.

Full year of salary. Massive capital gain with almost no cost basis. The kind of tax bill that makes you wonder if selling was even worth it.

And here's the thing—Jamie had been giving $10,000 a year to charity for years. She loved doing it. But she'd always thought, "I should probably be smarter about this."

Turns out, that instinct was about to save her.

Jamie, 62, had no cost basis in her business. She'd built it from nothing, so when she sold, nearly the entire $2.5 million was taxable as a capital gain.

On top of her regular income that year.

Her accountant ran the numbers. The tax bill was going to be staggering.

She wanted to be charitable. She'd been doing it for years. But $10,000 here and there wasn't moving the needle on her taxes.

Most charitably inclined people give the same way Jamie did—small amounts each year, whenever it feels right.

It's like watering a garden with a spray bottle. You're doing something, but you're not really getting the full benefit.

The IRS gives you a tax deduction for charitable contributions. But if you're giving $10,000 a year and taking the standard deduction anyway, that charity isn't reducing your taxes at all.

You're being generous. But you're not being strategic.

We introduced Jamie to something called a donor-advised fund.

Here's how it works: instead of giving $10,000 a year for ten years, you contribute $100,000 all at once into the fund. You get the full tax deduction immediately—right when you need it most.

Then, over the next decade, you decide where that money goes. You control the grants to charities whenever you want. Set it up to happen automatically, or do it manually each year.

For Jamie, this was perfect. The $100,000 deduction helped offset her massive capital gain in the year she sold her business. And now, she doesn't have to think about charitable giving for the next ten years. It's already handled.

Jamie saved a significant amount in taxes—money that would have gone to the IRS instead stayed in her control.

But the real win? Peace of mind.

She's not scrambling to figure out her charitable giving every December. She's not wondering if she's being strategic enough. She already did the heavy lifting. Now she gets to enjoy retirement knowing her giving plan is on autopilot.

And when she turns 72? She'll have another tool at her disposal—something called qualified charitable distributions. But that's a story for another time.

If you're already planning to give to charity, the timing matters as much as the amount.

A donor-advised fund lets you bunch years of giving into one strategic move—especially powerful in high-income years like business sales, Roth conversions, or stock option exercises.

You're going to give anyway. Why not get the maximum tax benefit when it matters most?

One more thing – I read every single reply to these emails.

I use your responses to guide my content, so it might become next week’s deep dive.

Happy Retiring,

Josh Rendler, CFP®

_{For privacy, names and minor details were changed. Education only, not advice. Consult your professional(s).}