A tech executive's RSU shares were worth $2 million when they vested. That $2 million was taxed as pay back then. Today the shares are worth $12 million. Selling them all in 2026 is a $10 million gain: 20% capital gains tax plus the 3.8% net investment income tax, about $2.38 million in federal tax. State tax comes on top.
The common advice is "just pay it." Fair. Check three things first.
- Would you give to charity anyway? Giving long-held shares instead of cash can avoid the capital gains tax on those shares, and the gift has to happen before the sale is locked in.
- Would you leave part of it to charity? A charitable remainder trust can sell the shares without tax inside the trust, pay you income for years, and leave what's left to charity. You pay the tax as the income comes out.
- Do you want to spread out your risk without selling? A properly built exchange fund can swap one stock for a share of a diversified pool with no tax now. The tax is deferred, not erased, and you usually commit for 7 years.
Each one depends on facts that have to be checked before the sale, not after.
Rates: IRC 1(h), 1411. Giving: IRC 170, 664. Exchange funds: IRC 721, 351(e).