Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
The Earnout Accounting Trap That Cost a Founder $1.2 Million
In M&A earnouts, how you structure the earnout payments can have massive tax implications. This episode examines the case of a SaaS founder who structured his earnout as a consulting agreement and ended up losing $1.2 million to higher taxes and missed capital gains treatment. Lucas and Luna break down the difference between a sale of stock and a payment for services, the IRS rules around contingent consideration, and the simple structuring fix that could have saved the founder millions. Specific examples include the 'Section 1060 allocation' and how the IRS views earnout payments…
The skinny
The skinny isn't ready yet — notes appear once the transcript is processed.