Step 5 · Tax-aware transition plan
From here to the target — tax-aware
Getting to the proposed portfolio is itself a strategy. This phases repositioning across years to respect an annual gain budget, harvests losses first, and routes concentrated low-basis lots to a hedging overlay instead of a forced sale.
Annual realized-gain budget
$1,500,000 / year
The most realized gain the client is willing to recognize each year. Lowering it stretches the transition over more years and reduces any single year's tax bill.
Transition length
2 yr
to fully reposition
Total transition tax
$733.7K
across all years
Repositioned now
$9.3M
13 lots
Hedged / deferred
$5.7M
2 overlay · 0 hold
Realized gains & tax by year
Phased against the gain budget
Lot-level actions
Every position has a destination
| Position | Market Value | Embedded Gain | Action | Year | Tax | Rationale |
|---|---|---|---|---|---|---|
| AGGTaxable | $980,000 | -$70,000 | Sell / reposition | 1 | — | Harvest loss now to offset realized gains. |
| BNDTaxable | $576,000 | -$64,000 | Sell / reposition | 1 | — | Harvest loss now to offset realized gains. |
| VNQTaxable | $360,000 | -$40,000 | Sell / reposition | 1 | — | Harvest loss now to offset realized gains. |
| MUBTrust | $642,000 | -$18,000 | Sell / reposition | 1 | — | Harvest loss now to offset realized gains. |
| SGOVTaxable | $900,000 | $0 | Sell / reposition | 1 | — | Reposition (no embedded gain). |
| CASHTaxable | $1,200,000 | $0 | Sell / reposition | 1 | — | Reposition (no embedded gain). |
| TSLATaxable | $250,000 | $50,000 | Sell / reposition | 1 | $25,850 | Realize ST gain within Year 1 budget. |
| JNJTaxable | $310,000 | $70,000 | Sell / reposition | 1 | $24,290 | Realize LT gain within Year 1 budget. |
| KOTaxable | $310,000 | $110,000 | Sell / reposition | 1 | $38,170 | Realize LT gain within Year 1 budget. |
| GOOGLTaxable | $680,000 | $320,000 | Sell / reposition | 1 | $111,040 | Realize LT gain within Year 1 budget. |
| VTITaxable | $1,080,000 | $360,000 | Sell / reposition | 1 | $124,920 | Realize LT gain within Year 1 budget. |
| MSFTTaxable | $880,000 | $480,000 | Sell / reposition | 1 | $166,560 | Realize LT gain within Year 1 budget. |
| AAPLTaxable | $1,150,000 | $700,000 | Sell / reposition | 2 | $242,900 | Phase-in: realize in Year 2 to respect budget. |
| SPYTaxable | $1,680,000 | $780,000 | Hedge overlay | — | — | Concentrated low-basis SPY: route to collar/VPF overlay to defer $780,000 gain. |
| NVDATaxable | $4,000,000 | $3,680,000 | Hedge overlay | — | — | Concentrated low-basis NVDA: route to collar/VPF overlay to defer $3,680,000 gain. |
62.1% of assets repositioned through direct sales; the remainder is hedged or deferred to keep the realized-gain bill within budget.