• If a taxpayer is only selling a portion of shares, there may be an opportunity to pinpoint shares to be sold as the ones with least-advantageous basis.
• If the taxpayer has any input into the transaction structure, try to structure an installment sale to defer some of the tax cost over time.
Tax-smart donating may also be a method of saving on capital gains. “What about using gifts to aging family members who might provide a step-up [should they die] of greater fair market value basis?” Morris said, adding that it is possible to use charity structures to move fair market value out without facing the tax hit first.
The key is timing. “Am I donating the stock at the optimal price? Can I get the transfer done in time?” Pon said. “Your charitable deduction is the value of the stock at the donation—a great way of avoiding the capital gains.”