Founders & Business Owners

Lake House Private Wealth Management works with founders and business owners across the arc that runs from "this is getting real" to a year or two past a sale. The decisions that matter most in that arc are structural and time-bound: whether your stock qualifies for the Section 1202 QSBS exclusion and where you sit on the five-year clock, whether an 83(b) election was filed within 30 days, how rollover equity is treated, and what your buy-sell agreement actually does if a partner dies. We are an independent fiduciary firm, paid by you and not by anyone selling you a product. Chris Gatsch, our Managing Partner, built this practice after a career inside JPMorgan Chase and Bank of America Merrill Lynch, and works with owners well before a transaction is on the calendar.

This is you if...

• A banker told you your company could be worth a number you haven't said out loud to anyone, including your spouse.
• You've heard "QSBS" enough times to know it matters, and you don't know whether your shares qualify or when your five years are up.
• Your company converted from an LLC to a C corp at some point, and nobody has told you what that did to your holding period.
• You received restricted stock or rollover equity and you're not certain whether an 83(b) election was filed — or whether the 30-day window is already gone.
• Your buy-sell agreement is funded with life insurance, and it hasn't been looked at since before the Supreme Court decided Connelly in 2024.
• You take a modest salary, reinvest everything, and have almost nothing outside the business — no meaningful liquid portfolio, no plan that doesn't depend on the company.
• A buyer wants you to roll 25% of your equity into the new entity, and you can't tell whether that's a good deal or a way to keep you working for three more years.

If several of those are true, this page is written for you.

What's actually at stake

Owner mistakes tend to be quiet. They happen years before the exit, and nobody notices until the closing checklist.

QSBS is destroyed by ordinary housekeeping. Section 1202 can exclude a large share of gain on qualifying C corporation stock from federal tax — the single largest tax variable in most founder exits. It also has four company-level tests and a hard holding period, and it can be lost by a redemption, an entity conversion, drifting past the gross-asset ceiling, or simply selling in month 58. Stock acquired after July 4, 2025 falls under a tiered structure — a partial exclusion at three years, more at four, full at five — with a higher per-issuer cap. Stock acquired earlier follows the older rules. Which regime applies to which certificate is a question with a real answer, and most founders don't know it.

The 83(b) window is 30 days and there is no relief. Miss it on restricted stock or on rollover equity subject to vesting, and you convert what could have been capital gain on future appreciation into ordinary income as it vests. There is no late filing. The IRS now provides Form 15620 for this, with an electronic option — which removes the last excuse.

Rollover equity is not cash. It may be tax-deferred, or it may be taxable at close depending on structure. It is illiquid, it is usually a minority stake, and its value depends on a sponsor's plan you don't control. Owners routinely count it at full face value when planning what comes next.

Your buy-sell may be underwritten to a valuation that no longer holds. In Connelly v. United States (2024), the Supreme Court held that life insurance proceeds a corporation receives to fund a share redemption count toward the company's value for estate tax purposes, and the redemption obligation does not offset them. A great many redemption-structured agreements written before 2024 now produce an estate tax result their drafters did not intend.

Concentration without an outside portfolio. If the business is 85% of the balance sheet, the plan for your family is a bet on one company, one industry, and one set of customers. That may have been the right bet to make. It is a different question whether it's the right bet to keep.

What we do for you

1. Establish QSBS eligibility on paper, early. Which shares, issued when, under which version of the statute. The company-level tests — domestic C corp, qualified trade or business, the 80% active business test, the gross-asset ceiling at issuance. Where each block sits on the five-year clock, and what the calendar cost is of closing a deal two months early. Where eligibility is genuinely uncertain, the answer is a written opinion from tax counsel, not a shrug. We coordinate that; we don't render it.

2. Track the elections and the deadlines that don't move. 83(b) at 30 days. Section 1045 rollover of QSBS proceeds into replacement qualified stock within 60 days, when a sale would otherwise land short of the holding period. Entity-conversion timing. These live on a dated plan, not in someone's memory.

3. Model the transaction before you're negotiating it. Asset sale versus stock sale and who bears the cost. Rollover equity terms and what they're actually worth after illiquidity and a second-bite timeline. Escrow, holdback, and earnout treatment. How your entity structure — S corp, C corp, partnership, holdco — interacts with all of it. The number that matters is what lands in your account and when, not the headline.

4. Fix the risks that only bite when something goes wrong. Buy-sell funding and structure reviewed against Connelly, including whether a cross-purchase or insurance-LLC structure fits better than redemption. Key-person coverage sized to what the business would actually need. Disability and continuity provisions that many operating agreements simply don't have.

5. Build the portfolio that isn't the business. Before the exit, that means a deliberate outside position so your family's plan isn't fully correlated to the company. After it, it means converting a one-time event into durable income — asset location, cash reserves, and a withdrawal structure. Assets custodied at Schwab, Fidelity, or Raymond James.

6. Get charitable timing right, if it applies. Gifting appreciated stock before a sale is binding, and the sequence relative to a signed letter of intent matters. Donor-advised funds, charitable trusts, and multi-year bunching all have to be decided in advance — after the wire, the options narrow to writing checks.

How the relationship works

1. A 30-minute call. Where the business is, where you are, what's coming. No documents needed.

2. A working session. Cap table, formation and conversion documents, operating or shareholder agreement, buy-sell, last two personal and business returns. We come back with what's solid, what's exposed, and what has a deadline.

3. A written plan. Ordered by date. It names who does what — you, us, your CPA, your M&A attorney.

4. Ongoing work. Through the transaction and past it. Most of the value shows up in the years before a deal and the two years after.

Related guides

• QSBS: Does My Stock Qualify, and What Does It Mean for My Exit? — /qsbs-section-1202.html
• The 83(b) Election — /83b-election.html
• Employer Stock Concentration — /employer-stock-concentration.html
• Section 280G Golden Parachute Payments — /section-280g-golden-parachute.html (relevant if you're also an officer in the transaction)
• Glossary of Equity and Liquidity Event Terms — /glossary.html

When you're ready

If a sale is somewhere on the horizon — this year or five years out — a short conversation now is worth more than a long one later. Thirty minutes, no cost, no obligation.

It's a conversation, not a pitch.

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# Compliance and publishing notes

Not for publication. Internal working notes for One Seven review.