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michael15
New Member

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

My wife and I file jointly.  We live in California.  Our AGI for 2016 was $230,000.  AGI for 2017 will be similar.  I've held stock in the company since it was founded in 2006.
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SweetieJean
Level 15

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

Answered in comments.

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6 Replies
SweetieJean
Level 15

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

How much is your GAIN?
michael15
New Member

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

Hi SweetieJean.  We initially calculated the payout to be ~ 300K.  (Stocks were initially worth $0.0001 per share, so nearly all of that will be GAIN).  Even if my numbers are off somewhat, we'll have a big long-term capital gains hit.  

So my core question is:
What types of things can I do to limit / offset this tax hit?  
Of those options, what do I need to do before the end of the year?*

*I'm assuming I'll have to move quick and do some things before the end of 2017 (like gifting or inheritance to our son, etc)...
SweetieJean
Level 15

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

So your total 2017 income will be approx $260k + $300k = $560k?
TaxGuyBill
Level 9

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

Maxing out your retirement contributions and charitable donations are the main things you can do to reduce your total income tax.

Contributing to a HSA (if you qualify) is good.  In some cases paying your 2017 4th quarter State Estimated Tax payment and pre-paying your 2018 Real Estate taxes may help.

Gifts to Individuals, such as your son, are not tax deductible.
SweetieJean
Level 15

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

Also be aware that itemized deductions phaseout at that income level.
<a rel="nofollow" target="_blank" href="https://www.forbes.com/sites/kellyphillipserb/2017/04/05/taxes-from-a-to-z-2017-p-is-for-pease-limit...>
And see:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/newsroom/net-investment-income-tax-faqs">https://www.irs.gov/newsroom/net-invest...>
SweetieJean
Level 15

My startup company got acquired last week. I’ll get ~ 300K (2017 taxable event). What are things I can / should do to limit my tax hit? (Gifts, other?)

Answered in comments.

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