When life brings you a new business opportunity

Objectives:

• Strategically maximize tax implications for your concentrated stock.
• Ensure maximum tax benefit is taken for philanthropic giving.

Process:

• A review of your prior year’s tax returns to build a comprehensive tax picture.
• Evaluate all of your stock compensation awards to ensure that, going forward, diversification is achieved in a tax-optimized manner with particular regard to Same Day Sale vs. Exercise and Hold decisions—when to exercise and maximize long-term capital gains rates.
• Forensically track all AMT that is incurred to ensure timely recovery of AMT credits in subsequent years.

Tax-Loss Harvesting:

A process that can be done with any type of capital investment at any time of the year.

Potential Solutions:

• Understand the benefits of a Charitable Remainder Trust (CRT) solution to defer taxes on stock diversification strategy. Benefits include: upfront tax deductions on the charitable donation component providing a platform to favor charitable causes and significantly deferring capital gains taxes.
• Use lifetime gifting strategies that use today’s historically high Unified Estate and Gift Tax Exemption amount ($11.70 million/per person) to avoid Gift Tax and Estate Tax, and integrate income and capital gains tax planning into your overall estate plan.
• Proactively anticipate the impact of proposed tax changes of the new administration in order to optimize tax reduction strategies.

While traditional hedging approaches employ a static “hedge-it-and-forget-it” mentality, we believe in an active approach to optimize the value of the concentrated stock position.

• We aim to hedge concentrated stock positions when fundamental and technical trends are weak but may remove hedges when fundamental and technical trends are strong, allowing the position to potentially gain in value.
• This strategy is a more opportunistic approach that lowers hedging costs and enhances potential returns.
• We use options strategies to create income from concentrated positions to safeguard the positions against substantial loss,

Leverage options strategies to create income from concentrated positions to safeguard the positions against substantial loss.

Overview

• Collars offer minimum price level for sale (put) while retaining upside exposure to call strike (call) mitigation levels
• Flexibility to select call and put strike prices to achieve desired payoffs and risk

Potential Benefits

• Upside participation to call strike price
• Helps protect against significant declines on a stock below put strike price
• Retain shares, dividends, and voting rights

Risks and Considerations

• Upside capped above call strike price (unless calls are bought back)
• Exposure to losses down to put strike price