If you are planning on selling your business in the future, you should be aware of the Lifetime Capital Gains Exemption on the sale of active small businesses.
When you sell a capital asset, such as shares of a company, that is usually taxed as a capital gain. However, when you sell shares of an active business, you may qualify for a tax incentive called the Lifetime Capital Gains Exemption, which allows you to claim almost $900,000 of the capital gain exempt from taxes. That means you can pocket up to $900,000 tax-free (although the alternative minimum tax can apply).
Your business needs to be structured in a particular way to be eligible for this exemption. Our Business Tax Planning Team can help make that happen.