Similar mechanisms exist in the U.K. - entrepreneur’s relief/BADR allows you to pay a flat 10% on the full or partial sale of a business you founded, up to £1M - was £10M until 2020. You can of course do similar shenanigans with family to use their allowances too.
You can also of course emigrate to Portugal under the NHR scheme and between the fifth and seventh year sell whatever you fancy and not be liable for CGT anywhere.
The headline is a bit clickbait-y. If your business turns a profit, it’s quite challenging to not legally pay taxes on the profits. Not to mention taxes owed on a salary you pay yourself.
If your business just has losses, I suppose it’s true you can eventually find someone else to sell to who apparently wants to spend a lot of money to buy your money-losing business?
What on earth is wrong with not paying taxes legally? What taxes does anyone pay other than those that they must pay?
If the government wants a tax to be paid they need to make it simple and unconditional. If there are loopholes or ways to legally avoid it, they will be discovered and people will take advantage of them.
If I understood correctly, it's "how not to pay taxes when selling your company".
At least some of the advice requires preparation years ahead. What happens if the company does not become as valuable as you expect it to, or at all? Or way more valuable, for that matter?
is the author writing this article from the future? Peter Thiel is 57 years old (2025).
‘Peter Thiel famously bought his Paypal shares (which were valued at a few cents when he founded the company) into his Roth IRA account. When he turned 65, he was able to access the billions that the Paypal equity was worth with 0 tax on it.’
Clickbait? This is how to avoid a tax event. It's different than not paying what's due. It's known, clever method to change the tax class of some of your money. We teach this method in my angel group.
> This is the Qualified Small Business Stock Tax Exclusion. Basically as long as you wait 5 years before selling the business, you won’t be taxed on the first $10 million dollars. This isn’t some loophole, this is exactly what it was intended for so that people are encouraged to take risks.
First this doesn't work for a Sub S only a 'C' corp.
Second, this wouldn't work in many cases when someone only wants to acquire the assets of the business and not the actual corporation in order to avoid liability going forward.
Note that typically the buyer would decide the issue (sure you with your 'small' business could say 'has to be corp' but that would potentially limit companies that would want to buy)
My point is the OP makes a broad statement "Business owners have the most flexibility of everyone to not pay their taxes. I personally think these things are questionable but its what I have seen others do over the last few years and what has been recommended to me by every top accounting firm in New York." and the benefit (like anything else is specific as far as the exact situation).
Edit: Want to make clear the liability is more than the money liabilities it's also potential lawsuits that hold over to the company acquiring.
The problem with your article is that it’s extremely difficult to turn a company into a >$10 million asset value company for the founder and outside of the silicon valley VC world a company that doesn’t generate any net income isn’t worth $10 million. It’s not that simple to conjure up a $10 milliion company out of thin air.
So in the real world choosing QSBS stock results in electing into double taxation, so if you are starting a company to that will make net income that company is going to
Also, just to clarify, the article says save $10 million in tax in at least one place, but what you really mean is $10 million in capital gains taxable income, so really it is saving about 2.38 million in Federal tax (20% plus NIIT) plus the state if the state recognizes QSBS.
In my experience, most people benefit from QSBS after building a company for 10-15 years and selling for $3-7 million.
1) be rich (or even better filthy rich)
2) go to PWC/EY/etc, pay them handsomely, let them work their magic
3) they got offices all over the planet and are updated on every single legislation/regulation around the planet
4) they (PWC/EY/..) make sure you use the very best ways, tailor-made to not pay taxes. This could mean thwt you need to move and live to some random village in Switzerland (IKEA dude, the writer of the Alchemist (Paulo Coelho)).
5) never pay taxes
The IRS sucks. They're staffed with dishonest grifters. I dealt with them when my dad was still alive, and hadn't paid his taxes for 11 years. They would send him a bill and he would just pay it without filing. They would continue to bill, assuming that he was hiding something because he never filed. Unfortunately, I was never able to get most of that money back.
One time, the IRS "lost" the cost basis for my investments during a year of heavy trading. They sent me a bill for $400k. After fighting with them for over two years, I eventually had to pay them ($180 for something else I had overlooked and never got the records for). I went back and forth with them three times, and they kept claiming that I owed them smaller amounts, but still much larger than anything I actually owed.
Most recently, I accidentally over-withheld on my 2024 income. They owe me about $30k and they're in no hurry to pay me. Fortunately, I learned that they must pay interest (7%!) on my over-payment. Hopefully I'll get this settled before next April 15th, but if I don't, I'll be sure to under-withhold on some of my deferred income this year to balance it out.
What I've learned from all of this is that the IRS is less concerned with what is legal than with how much of your money they can grab. If you're wealthy enough to afford a good tax attorney, you can usually fight them and win.
Step 0. In America, be rich to receive all of the legalized tax dodges to pay less than ordinary workers.
Also note that US citizens who leave the country and pay foreign income taxes elsewhere still have to pay federal income taxes just like the only other country that does this, Eritrea. The only way out is to renounce citizenship and be doxed in the Federal Register, pay lots of legal costs, and risk arbitrary demands for $10k fines for "not paying back taxes" and also being denied entry should it be determined for it was "economic reasons" any point in the future.
I don't understand how Thiel was able to buy his PayPal shares using a Roth. I thought you aren't allowed use your Roth to invest in a company you work for.
Can someone who knows more than me explain where I am wrong?
This advice is generally good. Used to give variations of this when I was still at a firm.
The most important one if you really want to avoid paying taxes on the sale of your business is to move to Puerto Rico and establish domicile there before discussions for a sale have commenced.
Not paying taxes and then complaining about the state of nation (alternatively education, healthcare, security, infrastructur, etc). That is what the elites of our country are doing. Facepalm!
25 comments
[ 2.7 ms ] story [ 43.1 ms ] threadYou can also of course emigrate to Portugal under the NHR scheme and between the fifth and seventh year sell whatever you fancy and not be liable for CGT anywhere.
If your business just has losses, I suppose it’s true you can eventually find someone else to sell to who apparently wants to spend a lot of money to buy your money-losing business?
If the government wants a tax to be paid they need to make it simple and unconditional. If there are loopholes or ways to legally avoid it, they will be discovered and people will take advantage of them.
At least some of the advice requires preparation years ahead. What happens if the company does not become as valuable as you expect it to, or at all? Or way more valuable, for that matter?
‘Peter Thiel famously bought his Paypal shares (which were valued at a few cents when he founded the company) into his Roth IRA account. When he turned 65, he was able to access the billions that the Paypal equity was worth with 0 tax on it.’
An llc is not a tax entity also
First this doesn't work for a Sub S only a 'C' corp.
https://carta.com/learn/startups/tax-planning/qsbs/
Second, this wouldn't work in many cases when someone only wants to acquire the assets of the business and not the actual corporation in order to avoid liability going forward.
https://www.brickbusinesslaw.com/blog/should-i-buy-the-compa...
Note that typically the buyer would decide the issue (sure you with your 'small' business could say 'has to be corp' but that would potentially limit companies that would want to buy)
My point is the OP makes a broad statement "Business owners have the most flexibility of everyone to not pay their taxes. I personally think these things are questionable but its what I have seen others do over the last few years and what has been recommended to me by every top accounting firm in New York." and the benefit (like anything else is specific as far as the exact situation).
Edit: Want to make clear the liability is more than the money liabilities it's also potential lawsuits that hold over to the company acquiring.
So in the real world choosing QSBS stock results in electing into double taxation, so if you are starting a company to that will make net income that company is going to
Also, just to clarify, the article says save $10 million in tax in at least one place, but what you really mean is $10 million in capital gains taxable income, so really it is saving about 2.38 million in Federal tax (20% plus NIIT) plus the state if the state recognizes QSBS.
In my experience, most people benefit from QSBS after building a company for 10-15 years and selling for $3-7 million.
The quieter and larger the exemption the better.
https://www.mintz.com/insights-center/viewpoints/2906/2025-0...
One time, the IRS "lost" the cost basis for my investments during a year of heavy trading. They sent me a bill for $400k. After fighting with them for over two years, I eventually had to pay them ($180 for something else I had overlooked and never got the records for). I went back and forth with them three times, and they kept claiming that I owed them smaller amounts, but still much larger than anything I actually owed.
Most recently, I accidentally over-withheld on my 2024 income. They owe me about $30k and they're in no hurry to pay me. Fortunately, I learned that they must pay interest (7%!) on my over-payment. Hopefully I'll get this settled before next April 15th, but if I don't, I'll be sure to under-withhold on some of my deferred income this year to balance it out.
What I've learned from all of this is that the IRS is less concerned with what is legal than with how much of your money they can grab. If you're wealthy enough to afford a good tax attorney, you can usually fight them and win.
Also note that US citizens who leave the country and pay foreign income taxes elsewhere still have to pay federal income taxes just like the only other country that does this, Eritrea. The only way out is to renounce citizenship and be doxed in the Federal Register, pay lots of legal costs, and risk arbitrary demands for $10k fines for "not paying back taxes" and also being denied entry should it be determined for it was "economic reasons" any point in the future.
https://youtu.be/YAJCvt9tOYE
(The donors to the politicians use these loopholes, so why would a politician end it...)
Can someone who knows more than me explain where I am wrong?
The most important one if you really want to avoid paying taxes on the sale of your business is to move to Puerto Rico and establish domicile there before discussions for a sale have commenced.
Pretty sure it's 59.5, as long as the principal has been in 5 years.
~100% of the posters use "loopholes" to refer to tax exemptions they feel are bad, and should be eliminated.
and
~100% of the posters believe some tax exemptions are good. These are not "loopholes".
Not in this thread: any objective rule by which these two ideas may be differentiated.