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Tax Strategies for large company stock holdings or selling a business

May 03, 2024

What do you do when you've accumulated a large amount of company stock (through bonuses, deferred compensation, options, etc)? Trying to reap the benefits of this stock can be tricky.

Navigating the intricate world of taxes can be daunting, especially when faced with unique challenges like those encountered by clients with substantial holdings in company stock or businesses ready for sale. These scenarios pose significant tax implications, underscoring the importance of strategic planning and professional guidance.

Consider the first scenario, where individuals accumulate significant amounts of company stock over the years, whether through deferred compensation, bonuses, or stock options. This accumulation often represents a substantial portion of their overall wealth, creating a precarious situation with excessive reliance on a single asset. Diversification is crucial, but the question arises: how can one diversify without triggering substantial tax liabilities?

What do you do when you want to sell your business, which you've had for many years, and, naturally, you want to keep as much of the sale profits for your future?

The second scenario presents another set of challenges. Imagine you're on the verge of selling your business for a considerable sum—a culmination of years of hard work and dedication. While the prospect of financial stability is enticing, it's essential to consider the tax implications of such a transaction. How much of the sale proceeds will be eroded by taxes, potentially impacting your financial future and that of your family?

These complex tax situations demand experience from both certified public accountants (CPAs), attorneys and financial advisors well-versed in tax efficiencies and strategies.

Fortunately, various strategies exist to help mitigate tax burdens and can enhance financial outcomes.

There are products and strategies which offer unique tax advantages and wealth preservation. Additionally, techniques like donating appreciated securities and tax loss harvesting can further enhance tax efficiency and portfolio performance.

It's crucial to emphasize that tackling these challenges alone—without professional assistance—is ill-advised. Achieving favorable tax outcomes requires a comprehensive understanding of tax laws, financial planning principles, and investment strategies. Moreover, implementing these strategies effectively demands time, experience, and ongoing oversight.

In conclusion, when confronted with complex tax challenges such as substantial company stock holdings or impending business sales, seeking the guidance of qualified professionals is paramount. By leveraging their knowledge and experience, individuals can navigate these challenges effectively, helping to protect their financial well-being and creating tax efficiency in the process.

Every situation is different. Because of the complexity of these situations, one-on-one conversations are needed to talk through options and strategies.

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