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Selling company stock or one big position: spread it, shelter it, or give it

A concentrated position is the one big sale where installment sales and 1031s do not apply. The tools are different: which year, which lot, which account, and whether charity is part of the picture.

By , founder, Retirement Literacy Foundation · Updated
Admitted to practice before the IRS.

Short answerIn this page's 2026 example, a married California couple sells $1,500,000 of employer stock with a $150,000 basis in one year and owes about $390,100, or 29% of the gain: about $218,000 federal capital gains tax, $41,800 net investment income tax and $130,300 California tax. Installment sales and 1031s do not apply, so the levers are year, lot, account and charity (last reviewed October 10, 2026).

One-page cheat sheet for this exact situation, plus a live Zoom class Thursday, October 22, 2026 at 4:00 PM PT / 7:00 PM ET. Nothing is sold.

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The number

What does selling company stock cost in tax?

$1,500,000 of employer stock with $150,000 basis, married couple, California, sold in one year in 2026

LayerRate (source below)Amount
Long-term capital gain ($1.35M)0% / 15%, then 20% above $613,700 of taxable incomeabout $218,000
Net investment income tax3.8% of income over $250,000about $41,800
California1% to 12.3%, plus 1% over $1 millionabout $130,300
Totalabout $390,100 (29% of gain)

Rounded, illustrative, assumes no other income and no selling costs in the year of sale. Federal: 2026 brackets and $32,200 standard deduction (IRS Rev. Proc. 2025-32); California: 2026 FTB rate schedules (FTB Tax News, October 2026). See Sources and review at the bottom of the page.

The options, in plain language

How can you pay less tax or spread it out?

  1. Sell across years, filling brackets. Sell enough each year to stay under the 20% line ($613,700 MFJ taxable) and, where possible, the 3.8% NIIT line. The 0% bracket ($98,900 MFJ taxable income, 2026) is real in a low-income year, but smaller once you draw Social Security, because gains make more of the benefit taxable.
  2. QSBS (Section 1202). Original-issue C corp stock issued after July 4, 2025: 50% of the gain excluded after 3 years, 75% after 4, 100% after 5, up to $15M per company (IRC 1202). Older stock: 5 years, $10M. Confirm eligibility before selling a share.
  3. Exchange fund. Contribute the position to a diversified partnership; no sale, no tax, diversified after 7 years. Accredited investors, high minimums, illiquid.
  4. Charitable remainder trust or donor-advised fund. Give appreciated shares, not cash. A CRT sells untaxed and pays income for life; a DAF gives a deduction at full value with no gain.
  5. Gift and step-up. Shares given to family in lower brackets carry your basis; shares held to death get a step-up. Sometimes the answer is to sell a little and hold the rest.
Who this is written for: people who have owned the asset for years, often decades, and are selling once, usually around retirement. If you are buying and selling frequently, different rules (dealer status, ordinary income) apply and this page is not for you.

Six questions to bring to your CPA

  1. Lot-by-lot basis and holding periods?
  2. Is any of it QSBS, and what documents prove it?
  3. How much can I sell this year and stay under 20% and NIIT?
  4. Which shares should go to charity versus be sold?
  5. Does an exchange fund make sense at my size and liquidity needs?
  6. RSU / ISO / ESPP pieces: which are ordinary income?

The deadlines that decide it

  • QSBS: 5-year holding from issuance for the full exclusion (3 and 4 years give 50% and 75% on stock issued after July 4, 2025).
  • Charitable gifts of stock: delivered by December 31.
  • Estimated tax in the quarter of a large sale.
  • 10b5-1 plans for insiders: set up before the window closes.

Common questions

Straight answers

Can I do an installment sale of publicly traded stock?

No. Publicly traded securities are excluded from Section 453.

What is the 0% capital gains bracket?

Married couples with taxable income under $98,900 (2026) pay 0% federal on long-term gains. A retirement gap year can be a 0% year. If you already draw Social Security the room is smaller, because gains count toward the income that makes benefits taxable.

Is an exchange fund a sale?

No, it is a contribution to a partnership. Tax is deferred until you sell the fund units.

What about an inherited position?

It got a step-up at death; the gain before that date is gone. Sell or hold on the merits, not the tax.

Audit trail

Sources and review

Reviewed for the Retirement Literacy Foundation, a 501(c)(3) education nonprofit. Prepared by Hans Goldstein, EA, retirement educator. Admitted to practice before the IRS. Informational only. Not tax, legal or investment advice. Every figure below cites its source so your CPA or attorney can check it.

Figures are 2026 federal and 2026 California amounts unless stated. Examples are illustrative, rounded, and assume no other income; your numbers will differ. Last reviewed October 10, 2026.

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Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS.