Ideas on reducing taxes on a huge capital gain

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's too bad it's happening next year because Trump changed tax laws for charitable giving for 2026. Only the portion of your annual charitable contributions that exceeds 0.5% of your adjusted gross income (AGI) will be deductible.

This “0.5% AGI floor” applies to all itemized charitable gifts, including those made to donor advised funds (DAFs). For example, if your AGI is $1,000,000, only the amount of your charitable giving above $5,000 (0.5% of $1,000,000) will be deductible.

Though, you should still open a donor advised fund and give some of the windfall to charity. Very easy to set up on Fidelity.

Trump didn't change any tax laws. Congress did.

Fine, MAGA Congress did.

[Anonymous]

We set up a DAF about 15 years ago using a lot of appreciated stock. Since then every year we gift out most of the prior years gains such that what is in the DAF today is modestly larger than what we originally put in. It’s the gift that keeps on giving. Just recently we made another large contribution to the DAF to offset some large capital gains.

About five years ago we set up a CRUT and each year we take out 5% (minimum amount required) but setting it up required a lawyer and every year we have to file a trust return which costs money itself. A CRUT is only worth it if you are putting in a lot of money. For most people a DAF is the smart way to go. Fidelity has a really good DAF.

[Anonymous]

I am confused about how one benefits personally by making the donations. Donations are great! So, make them! But how does it save you money if you are giving the money away anyway?

Now reading that OP made millions of dollars, I agree that they should be paying for a professional and then telling everyone here what they learned.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Set up a charitable remainder trust. Put the stock in there before the deal closes. You won’t pay taxes on the capital gains and can withdraw income from the trust while you are alive or for a certain term depending on how it’s set up. Whatever is left when you die goes to the charity you designated. Win-win.

These charitable remainder trusts are not very popular, not sure why. Maybe due to their complexity? OP, I would start by doing a search over at bogleheads.

It's simpler to just donate less now, and keep the rest for yourself as gains/income.

[Anonymous]

Anonymous wrote:I am confused about how one benefits personally by making the donations. Donations are great! So, make them! But how does it save you money if you are giving the money away anyway?

Now reading that OP made millions of dollars, I agree that they should be paying for a professional and then telling everyone here what they learned.

Donating appreciated stock gives you the same ($0) take-home pay as selling first and then donating it, but if you donate without selling, then the charity gets all the money instead of the government getting some.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am confused about how one benefits personally by making the donations. Donations are great! So, make them! But how does it save you money if you are giving the money away anyway?

Now reading that OP made millions of dollars, I agree that they should be paying for a professional and then telling everyone here what they learned.

Donating appreciated stock gives you the same ($0) take-home pay as selling first and then donating it, but if you donate without selling, then the charity gets all the money instead of the government getting some.

Yes. Another way to put it is that if you want to give $x, this is a way to give the charity $x while saving taxes, which leaves more money for you.

[Anonymous]

Anonymous wrote:I am confused about how one benefits personally by making the donations. Donations are great! So, make them! But how does it save you money if you are giving the money away anyway?

Now reading that OP made millions of dollars, I agree that they should be paying for a professional and then telling everyone here what they learned.

The difference is using “regular” money you’ve paid income taxes on, versus, say putting appreciated stock into a DAF. You don’t pay capital gains gains on that stock, it goes into the DAF, and you take a large tax deduction in the year you put the money in. The money can also go tax free, all for the benefit of the charity.

[Anonymous]

You could invest a large portion of the proceeds from the sale into a qualified opportunity fund. If reinvest into a QOF and hold the investment for 10 years, you might be able to avoid paying taxes on the gain altogether.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Looking for some ideas. One of my stocks, Exact Sciences (EXAS), that I have a large position in is being bought out by Abbott Labs (ABT) in an all-cash offer expected to close Q2 2026. I will have a very large capital gain when this buy-out closes. Looking for ideas for what I can do in 2025 and 2026 before the deal closes to reduce my taxes. Right now I'm looking at 20% LTCG plus the 3.8% NIIT for investment gains above $250K plus most likely getting hit by the AMT for the half that is in a taxable brokerage account. Fortunately, the other half in a Roth IRA. Serious responses only please. I don't want this to turn into a debate about the benefits of capitalism vs paying my fair share. Thanks.

Suck it up and pay, you greedy glass bowl. Oh boohoo you have a windfall and you have to play 24% tax. How devastating.

+1

[Anonymous]

If you donate appreciated stock to a donor advised fund you can deduct up to 30% of your adjusted gross income. So, if your AGI is $300k you can deduct up to $90k.

Separately, if you have losses elsewhere you can take them and use them as an offset to the gain.

[Anonymous]

Move to Puerto Rico

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's too bad it's happening next year because Trump changed tax laws for charitable giving for 2026. Only the portion of your annual charitable contributions that exceeds 0.5% of your adjusted gross income (AGI) will be deductible.

This “0.5% AGI floor” applies to all itemized charitable gifts, including those made to donor advised funds (DAFs). For example, if your AGI is $1,000,000, only the amount of your charitable giving above $5,000 (0.5% of $1,000,000) will be deductible.

Though, you should still open a donor advised fund and give some of the windfall to charity. Very easy to set up on Fidelity.

Trump didn't change any tax laws. Congress did.

Who signed the law?

[Anonymous]

Anonymous wrote:If you donate appreciated stock to a donor advised fund you can deduct up to 30% of your adjusted gross income. So, if your AGI is $300k you can deduct up to $90k.

Separately, if you have losses elsewhere you can take them and use them as an offset to the gain.

My confusion is that you are still losing the value of the stock. Wouldn’t you have to give away 90k of stock to get the 90k deduction?

[Anonymous]

Congrats, best of luck.

[Anonymous]

Invest the sale proceeds in a qualified opportunity fund.