Hailey Bieber – daughter of actor Stephen Baldwin and wife of singer Justin Bieber – just proved she’s more than another nepo baby with a serum line. Today she’s a full-blown tax case study with a side of moisturizer! In a deal that left beauty insiders and financial planners equally slack-jawed, she sold her skincare brand, Rhode, to e.l.f. Beauty for $1.1 billion. The press called it iconic. Wall Street called it synergistic. And the IRS? They called dibs.
To be clear, Hailey didn’t get a billion-dollar check in a sparkly gift bag. The deal includes $800 million in cash and shares, with another $200 million or so in earnouts based on Rhode’s future performance. It’s the kind of transaction that sends a warm shiver down a tax advisor’s spine and a cold one down the seller’s back — because when you’re dealing in that many commas, you’re also dealing in capital gains.
Let’s break it down: if Hailey owned her shares outright and didn’t sell through a fancy structure like a family trust, she’s looking at long-term capital gains tax on the appreciation. Federal capital gains top out at 20%, plus a 3.8% net investment income tax. Add in California’s 13.3% top rate if she’s still domiciled there (cue ominous music), and she could be handing over north of 37% to Uncle Sam and Cousin Gavin on the portion of the proceeds she receives in cash.
That’s roughly $370 million gone faster than a limited-edition lip peptide. Which raises the question, did she plan for this? Because the tax code gives you some great ways to soften that blow, if you know where to look and start early. Qualified Small Business Stock (QSBS) under Section 1202, for example, can let you exclude up to $10 million in gain (or 10 times your basis) from federal taxes if you play your cards right. But that sweet move only works if the business is a C corporation and you’ve held the stock for at least five years. Rhode was launched in 2022. You can do the math.
Still, with a bit of forward planning, she might have shifted shares to a “453 rollover.” That move alone could defer tax on the entire cash proceeds. That’s what we call a tax-saving glow-up. Alternatively, she could roll some of her proceeds into a Qualified Opportunity Fund to defer taxes, while investing in underserved communities. Talk about look good, do good, deduct good.
Then there’s the earnout — up to $200 million if Rhode hits performance targets. That’s ordinary income if structured as compensation, or (more likely), capital gains if treated as additional sale proceeds. Structuring that piece right is like choosing the right concealer — subtle, strategic, and capable of saving you a fortune.
Hailey’s deal is a case study in why selling a business is never just about price — it’s about how you structure the deal and how you plan for the tax aftermath. You don’t need to be a celebrity founder to take a page out of her playbook. If you’ve built a business, a brand, or even just have an inkling that your side hustle could be your exit ticket, you owe it to yourself to plan like it’s your billion-dollar moment.
When the offer comes — and if you’re smart and scrappy, it just might — you’ll want to do more than celebrate. You’ll want to keep what you’ve earned. And that takes more than a viral product and good lighting. It takes a tax plan that’s as bold as your ambition. So before your Rhode leads to e.l.f. money, call us. We’ll help you save more, shine brighter, and exit like a boss.
