Highly Appreciated Positions Aren't Something to Fear: You Just Need the Right Advice
A scenario we see often: someone holds a stock, a piece of land, or a business interest acquired twenty or thirty years ago. It has grown. On paper, it looks like success. But at some point the success started to feel like a trap. Selling triggers a tax bill. Not selling means too much of the financial picture tied to one position. So nothing happens. The position sits there, growing more concentrated and more complicated every year.
A highly appreciated position is not a problem. It is an asset that needs a strategy.
Why people freeze
The instinct to hold makes sense. Buy a stock at $10, watch it reach $80, and selling triggers a capital gains tax event on $70 of growth. That bill can feel large enough to justify leaving things alone.
Leaving things alone carries its own cost. A portfolio heavily concentrated in a single holding; employer stock, an inherited position, real estate, a business interest, carries risk that diversification would manage. If that position drops, there is no cushion. The tax savings from not selling can disappear in a downturn that a diversified portfolio would have absorbed without the same damage.
The right question is not "how do I avoid paying taxes." It is: what is the most tax-efficient path toward a strategy that matches my actual goals?
The strategies worth knowing
Working with an advisor who connects investment management to tax planning changes this conversation. A few approaches worth evaluating, depending on your situation:
Tax-loss harvesting. Losses elsewhere in the portfolio can offset gains from selling the appreciated position. This requires monitoring throughout the year, not a single year-end conversation.
Charitable giving. Donating appreciated securities directly to a charity or donor-advised fund eliminates the capital gains tax while generating a charitable deduction. For anyone already giving, this is one of the most efficient ways to do it.
Qualified opportunity zone investments. Reinvesting capital gains into a qualified opportunity zone fund within 180 days defers — and can reduce — the tax owed. Worth understanding for the right situation.
Gifting strategies. Transferring appreciated shares to family members in lower brackets, or to the next generation as part of an estate plan, can shift the tax burden in a way that benefits the family as a whole.
Systematic partial liquidation. Spreading sales across multiple tax years manages bracket exposure and allows continued participation in the position where appropriate.
Exchange funds. Eligible investors can contribute appreciated shares to a fund in exchange for a diversified interest, deferring the gain while reducing concentration.
The broader point
None of these is automatically right. The correct path depends on income, tax situation, estate goals, timeline, and what the proceeds need to accomplish. The most important first step is not picking a strategy, it is a comprehensive conversation that connects the investment decision to the tax plan to the estate plan to the income plan.
Ascent Advisors works with a Van Eck-affiliated investment framework and an in-house CFA who evaluates concentrated positions within the client's full financial picture. As fiduciaries, our only obligation is to recommend what is right for the client.
Clients who handle concentrated positions well are the ones who had the conversation before the decision felt urgent.
Ascent Advisors is an SEC-registered investment advisor. This blog is for informational purposes only and does not constitute personalized tax or investment advice. Consult with your advisor and tax professional before acting on any strategy described here.