The Pre-Close Checklist
Five considerations for advisors with business owner clients approaching a liquidity event. Business owner clients have a narrow window for charitable planning before a sale closes — here are the watchpoints to understand before that conversation starts.
Five watchpoints before the conversation starts
| Consideration | What to check | Key question |
|---|---|---|
| 1. Assignment of income | The gift must close before the transaction becomes a fixed right to proceeds. The IRS weighs the totality of circumstances — a signed LOI, board/shareholder approval, substantially agreed terms. No single event is determinative; coordinate timing with tax and legal counsel. | Where is the deal in its lifecycle? Has an LOI been signed, have shareholders voted, or are material terms effectively locked? |
| 2. Transfer restrictions | Shareholder agreements, operating agreements, and buy-sell arrangements often restrict transfers or require consent — review before initiating a gift. Even non-prohibitive consent requirements take time a tight deal timeline may not allow. | Have the governing business documents been reviewed, and is there time to satisfy any restrictions? |
| 3. Gift acceptance and buyer dynamics | Both the DAF sponsor and the buyer must agree. Sponsors independently assess interest type, liabilities, liquidity timeline, and legal risk. Buyers may object to a charity on the cap table over governance, reps and warranties, or closing mechanics — surface and resolve these before the gift. | Has the sponsor been engaged on acceptance, and has the buyer's stance on cap table changes been discussed with counsel? |
| 4. Entity type | Entity type shapes feasibility and economics. S-corp interests: charities can be shareholders (preserving the S-election), but gain on sale is taxed as UBTI at the sponsor level, reducing the net benefit. LLC, LP, and C-corp interests carry their own transferability, consent, and acceptance considerations. | What entity type is involved, what are the tax consequences to the sponsor on sale, and has the sponsor confirmed it can accept this interest? |
| 5. Valuation | A deduction requires a qualified appraisal completed between 60 days before contribution and the tax return due date, reflecting FMV as of the gift date — not the deal price (an audit risk if it looks reverse-engineered). Coordinate timing and methodology with tax counsel. | Has an appraiser been engaged in time, and does the methodology reflect FMV independent of the deal price? |
The question that opens the door
“Have you talked to your attorney about the timing of any charitable transfers before close?”
A single question, asked early enough, can be the difference between a client capturing a meaningful charitable and tax benefit — or missing the window entirely once a deal is contractually locked.
Have a client in this situation?
The window for charitable planning before a business sale closes is narrow, and getting the timing, entity type, and valuation right requires coordination between the advisor, tax counsel, and the DAF sponsor. Talk to a Ren expert before the client conversation starts.
