Robert & Lisa Chen

CriticalDeliveredAdvisory client

W-2HNWMarried filing jointlyCA, OREleanor VanceQuarterlyReturn on file

Est. current income

$2,910,000

vs $812,000 prior year

Effective rate

27.4%

Marginal bracket

37% ordinary / 23.8% LTCG+NIIT

Dec 31 hard stops

Robert & Lisa Chen

2026 Year-End Planning Summary

Dec 31 stops

~$630K–$675K of federal tax addressed across 4 opportunities (QSBS exclusion, loss harvesting, charitable bunching, gifting), plus the sale-structure question to resolve before filing.

Est. income

$2,910,000

vs $812,000

Effective rate

27.4%

Marginal

37% ordinary / 23.8% LTCG+NIIT

Key changes

flagged

1. Current-Year Action Items

Time-sensitive moves before December 31.

Tax-loss harvesting against the sale gain

Dec 31 hard stop

PYR Schedule D + brokerage data: concentrated equity position with mixed lots, several at unrealized losses.

To the extent any gain falls outside the §1202 exclusion, harvesting paired losses from the concentrated position is the highest-certainty offset available this year, at the 23.8% effective rate, while beginning to de-risk the concentration. The wash-sale rule reaches substantially identical securities acquired within 30 days before or after the sale, so replacement timing must be managed to preserve the loss.

$24,000–$52,000 of tax avoided

Assumes ~$100K–$220K of harvestable long-term losses offsetting gain otherwise taxed at 23.8%; applies only to gain not excluded under §1202. Wash-sale window (30 days before and after) observed.

Without action

Any non-excluded gain taxed at 23.8% with no offset; concentration risk remains.

With the plan

$24K–$52K of tax avoided and the position de-risked, if losses are realized before Dec 31.

DeadlineDecember 31, 2026

OwnerBoth

AuthorityIRC §1211(b)IRC §1212(b)IRC §1091

Donor-advised fund funded with appreciated stock

Dec 31 hard stop

Client response: "We'd like to do something meaningful charitably this year given the windfall."

Donating appreciated stock rather than cash secures a fair-market-value deduction within the 30%-of-AGI ceiling for capital-gain property (§170(b)(1)(C)) and permanently avoids the embedded gain. Concentrating several years of intended giving into this 37%-bracket year maximizes the deduction's marginal value, with any excess carried forward up to five years. A DAF lets the Chens fix the deduction year now while deciding on specific grants later.

~$33,000–$52,000 of federal tax saved (on a ~$90K–$140K gift)

Assumes a ~$90K–$140K gift of long-term appreciated stock — several years of intended giving bunched into this spike year — deductible at FMV within the 30%-of-AGI ceiling for capital-gain property, valued at the 37% marginal rate. The embedded ~23.8% gain on the donated shares is also permanently avoided. Excess over the AGI ceiling carries forward up to 5 years.

Without action

Cash giving spread thinly across years deducts at lower-bracket value; embedded gains stay taxable.

With the plan

$33K–$52K saved by bunching appreciated-stock giving into the 37% year; embedded gain avoided.

DeadlineDecember 31, 2026

OwnerBoth

AuthorityIRC §170(b)(1)(C)IRC §170(e)(1)IRC §170(f)(8)

Qualified Small Business Stock (QSBS) §1202 gain exclusion

Client response: "I finally sold my stake in the company I co-founded back in 2016."

The 2016 original-issue acquisition and C-corp structure make this a strong §1202 candidate under the pre-OBBBA regime, where the full >5-year holding period was met and the cap (greater of $10M or 10× basis) far exceeds the ~$2.4M gain. If the issuance and $50M gross-asset tests are satisfied, the entire gain may be excluded — roughly $571K of federal tax. Eligibility is documentation-driven and must be substantiated before the transaction closes; there is no retroactive cure.

~$2.4M gain excluded → ~$571K federal tax eliminated

Stock acquired at original issue in 2016 (pre-7/4/2025), so pre-OBBBA §1202 applies: >5-year holding met, exclusion capped at the greater of $10M or 10× basis — comfortably above this ~$2.4M gain. Savings = ~$2.4M × 23.8%. Note: §1202-excluded gain is not subject to NIIT; the 23.8% applies only to any non-excluded portion. OBBBA's tiered 3/4/5-year rules and $15M cap apply only to stock acquired after 7/4/2025 and are not relevant here.

Without action

Entire ~$2.4M gain taxed at 23.8% — ~$571K of federal tax that may not have been owed.

With the plan

Documented §1202 exclusion removes the qualifying gain from federal tax.

DeadlineBefore the sale closes

OwnerCPA

AuthorityIRC §1202

2. Long-Term Opportunities

Multi-year planning to revisit beyond this season.

Annual-exclusion gifting and lifetime-exemption strategy

Client response: "We want to start moving some wealth to our two kids and a grandchild."

A liquidity event is the natural moment to begin a multi-generational gifting program. Annual-exclusion gifts move assets and their future growth out of the taxable estate without using any lifetime exemption, and the exclusion is use-it-or-lose-it each year. For larger transfers, the $15M per-person exemption (indexed from 2027) favors moving highly appreciating assets early to capture growth outside the estate.

$19,000 per donee annually; larger transfers via the lifetime exemption

2026 annual exclusion $19,000/donee ($38,000 per couple electing split gifts); lifetime exemption $15M per person under OBBBA, inflation-indexed from 2027.

Without action

This year's $114K of exclusion gifting is lost if not made by Dec 31; future growth stays in the estate.

With the plan

$114K moved out of the estate this year (3 donees, split gifts), with larger exemption-funded transfers layered in.

DeadlineDecember 31, 2026 (annual exclusion)

OwnerBoth

3. Open Questions for the CPA

Items to resolve before the client conversation.

Sale structure — asset vs. stock, and installment treatment

Payments over two years suggest possible installment treatment, which interacts directly with the §1202 exclusion and could change the optimal recognition year. This must be resolved before filing: §453 reporting (with any §453A interest on deferred balances above $5M) versus electing out depends on how much gain is excludable and the multi-year rate picture. Installment treatment is also unavailable for publicly traded securities, so the character of what was sold needs confirming.

OwnerCPA

Elan

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