A business sale, an IPO, a final vest. The after-tax outcome is mostly decided before the money arrives. Here is what the year before should look like.
The largest tax bill of most investors' lives arrives attached to their best year. The company sells. The lockup expires. The final tranche vests. And almost all of the tax planning happens after the money lands, when the options have narrowed to picking deductions and writing the check.
That is backwards. The moves that actually change the after-tax number share one property: they only work in advance. Once the wire hits, they are gone. None of them are exotic. They just have to happen in the right order, starting roughly a year out.
Harvested losses carry forward indefinitely, which makes them the one tax asset you can stockpile years ahead of a sale. A portfolio running continuous tax-loss harvesting banks losses every year, and a long/short extension keeps banking them even in markets that only go up. By closing day, the loss bank is sitting there waiting to absorb the gain. Started early enough, it can absorb a lot of it.
If charitable giving is anywhere in your plans, the order of operations is the whole game. Donate appreciated stock before the sale and you generally deduct the full market value while the embedded gain is never realized by anyone. Sell first and give cash, and you pay the tax, then deduct what is left. Same generosity, very different after-tax cost. The catch is timing: once a deal is effectively locked in, the IRS can treat the gain as yours anyway. This move only exists while the outcome is still genuinely open.
A gain that lands in a single tax year is a spike, and spikes are expensive: they stack the top brackets, trigger surtaxes, and waste every lower bracket beneath them. Some of that is negotiable. Closing dates can straddle a year-end. Installment terms can spread payments, and the gain, across several years. Earnouts and holdbacks land when they land. None of this changes the price of the deal. It changes which brackets the price flows through, and that is a real number.
Every move that changes the after-tax number shares one property: it only works in advance.
The default path after a windfall is well worn: the proceeds sit in cash for a year while life settles, then get invested in a handful of ETFs with no tax plan attached. Better: the landing portfolio is designed before the deal closes. Proceeds go to work in a direct indexing account that starts harvesting from its first week, already building the offset for the next liquidity event. And the accounts themselves are structured with asset location in mind, so the tax drag on the new wealth is set correctly at the start instead of repaired years later.
Sequencing is everything, and the calendar is unforgiving. Charitable transfers have to clear before the deal is effectively done, not before the wire. Banked losses are subject to wash-sale and other limitations. Installment treatment has its own rules and does not fit every transaction. And a deal year almost always means estimated payments, so the cash for the tax bill needs its own plan. This is a team sport: deal counsel, CPA, and portfolio have to be working from the same timeline.
We start with the timeline, not the products. What is likely to happen, in which year, and what the gain looks like in each scenario. Then the portfolio gets sequenced against it: the loss bank built in the years before, the moves that must clear before signing mapped to dates, and the account structure the proceeds will land in designed in advance. Closing the deal is your job. Making sure the after-tax number was planned rather than accepted is ours.
For informational and educational purposes only. Outcomes depend on your transaction, lots, brackets, and timing; harvested losses are subject to wash-sale and other limitations, charitable and installment treatment depend on facts and structure, and offsets are not guaranteed. Coordinate with your tax and legal advisors. This is not personalized tax, legal, or investment advice.
A sale, an IPO, or a big vest somewhere on the horizon? The earlier the planning starts, the more of these moves are still on the table. Tell us the rough timeline and we will show you what the year before should look like.
Plan The Year Before