Grace Okafor

HighDraftingProspect

W-2HNWSingleNYEleanor VanceQuarterlyReturn on file

Est. current income

$1,240,000

vs $1,180,000 prior year

Effective rate

25.6%

Marginal bracket

37% ordinary / 23.8% LTCG+NIIT

Dec 31 hard stops

Grace Okafor

2026 Year-End Planning Summary

Dec 31 stops

~$60K–$95K of federal tax addressed across 3 opportunities (charitable bunching, gain diversification, Q4 estimate), with an opportunity-zone question to evaluate.

Est. income

$1,240,000

vs $1,180,000

Effective rate

25.6%

Marginal

37% ordinary / 23.8% LTCG+NIIT

Key changes

flagged

1. Current-Year Action Items

Time-sensitive moves before December 31.

Donor-advised fund funded with the appreciated position

Dec 31 hard stop

Client response: "I want to give more this year and I have a $22K charitable carryforward sitting there."

Donating the most-appreciated shares of the concentrated position accomplishes two goals at once: a FMV charitable deduction at the 37% rate and a tax-free trim of the concentration. Bunching into a DAF fixes the high-bracket deduction now while preserving grant flexibility, and the existing $22K carryforward is used before it expires. Cash giving would forfeit the embedded-gain avoidance.

~$37,000–$56,000 of federal tax saved (on a ~$100K–$150K gift)

Assumes a ~$100K–$150K gift of long-term appreciated shares from the concentrated position, deductible at FMV within the 30%-of-AGI ceiling for capital-gain property (§170(b)(1)(C)) at the 37% marginal rate, plus the avoided ~23.8% embedded gain. The unused $22K 2025 carryforward is absorbed first.

Without action

Cash giving forfeits the embedded-gain avoidance; the $22K carryforward risks expiring unused.

With the plan

$37K–$56K saved, the carryforward absorbed, and the concentrated position trimmed tax-free.

DeadlineDecember 31, 2026

OwnerBoth

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

Gain diversification paired with loss lots

Dec 31 hard stop

PYR Schedule D + holdings: ~60% concentration in one appreciated security.

A single position at ~60% of the taxable portfolio is a concentration risk independent of taxes. Realizing gains in measured tranches, netted against harvested losses, lets the position be unwound at a controlled 23.8% cost rather than all at once. The wash-sale rule applies to repurchases of substantially identical securities within 30 days.

$15,000–$30,000 of tax managed on the diversification

Assumes trimming the concentrated position and pairing realized gains with any harvestable losses elsewhere, taxed at 23.8% LTCG+NIIT. Figure reflects netting losses against a measured gain-realization tranche; wash-sale rule observed on replacements.

Without action

Concentration risk persists; an eventual forced sale could realize the full gain at once.

With the plan

Position unwound in controlled tranches at ~23.8%, risk reduced.

DeadlineDecember 31, 2026

OwnerBoth

AuthorityIRC §1211(b)IRC §1091IRC §1411

Q4 estimated payment to meet the safe harbor

PYR + current estimate: estimates set to prior-year tax; income up ~5%.

Estimates sized to prior-year tax fall short when income rises and capital gains are realized. Paying to the 110% safe harbor avoids the non-deductible §6654 penalty; the exact figure depends on the charitable and diversification moves, so finalize after those.

$1,500–$4,000 of penalty avoided

Assumes the §6654 safe harbor — 110% of 2025 tax ($283,200) = $311,520 — is not yet met; $240,000 paid through Q3 leaves a $71,520 Q4 gap. Figure reflects the §6654 rate on the shortfall.

Without action

~$71,520 short of the safe harbor; non-deductible §6654 penalty accrues.

With the plan

Safe harbor met; penalty avoided.

DeadlineJanuary 15, 2027 (Q4 voucher)

OwnerBoth

AuthorityIRC §6654

2. Long-Term Opportunities

Multi-year planning to revisit beyond this season.

3. Open Questions for the CPA

Items to resolve before the client conversation.

Opportunity-zone deferral — evaluate fit for realized gains

Gains realized on the diversification could be deferred via a Qualified Opportunity Fund if reinvested within 180 days, with the deferral running to the end of 2026 under current law. Whether this suits the client depends on liquidity needs and tolerance for an illiquid, longer-hold investment — to be discussed before any sale.

OwnerCPA

Elan

Grounded on Grace Okafor

I flagged 1 thing for Grace Okafor.

Elan brought this to you