Hello,
I have recently vested $1 million in company stocks and am looking for strategies to diversify my holdings. Are there specific approaches or tax strategies I should consider? I’m thinking about making significant sales and investing the proceeds into VOO, but I’d appreciate any detailed insights or alternative suggestions.
Your cost basis is the price at which the shares vested. The current price difference will determine your capital gains or losses.
Selling covered calls is a common method for unloading a position. Otherwise, you can sell the shares you want typically long-term capital gains first and keep enough cash aside for taxes.
Many businesses would have rules prohibiting options on corporate stock.
Do you have any thoughts on how much to unload at once and over what period? Also, how much should be invested in VOO or QQQM, and at what frequency?
Typically, the idea is to consider how much you would invest in the company’s stock if you had $1 million right now. You now know the appropriate amount to sell for.
Do I have losses to offset? and Can I avoid a tax bracket jump the 20% tax bracket/4% NIIT, or any state taxes if you have them, are the only important factors to take into account.
Sell calls with any level of vigor that suits you. Choose to diversify and pay more. Keep going until you get the concentration you want.
There is not much you can do to avoid taxes other than spreading out the sales, which carries the risk of the stock dropping. You might consider discussing exchange funds with a CPA if you are interested in exploring that option, but personally, I wouldn’t take that risk.