A reluctant holder sat in a concentrated position for years to avoid a tax hit. On his most recently vested shares, that hit was close to zero. He was bracing to pay full freight on the shares he was actually right to keep.

Tom is fifty-one, and for the better part of a decade, he has been doing something he believes is prudent: not selling his company stock.

He’s a senior individual contributor at a publicly traded tech company, and years of vesting RSUs have left him with a position that now dominates his portfolio. He knows it’s concentrated. He’s read the same warnings everyone has. But every time he thinks about trimming it, the same thought stops him cold: the tax bill. Selling, he’s certain, would hand him an enormous capital-gains hit, so he holds. Year after year, the position grows, and so does the reason not to touch it.

When he came in, he framed it as a tradeoff he’d made peace with: concentration risk on one side, a brutal tax bill on the other, and holding as the lesser evil.

The problem wasn’t his math. It was that he was applying one share’s tax story to a stack of shares that didn’t share it.

Two kinds of shares, two completely different tax bills

Here’s the piece that had been costing him. By the time an RSU is sitting in your account, it has already been taxed once as ordinary income, on its full value, the day it vested. That part is done. What matters when you sell is the second tax: the capital gain, and a capital gain is measured only against your cost basis. Your cost basis in vested RSU shares is the price on the day they vested.

That single fact splits his “one big concentrated position” into two completely different things. Of his roughly $1.6 million in company stock, close to $600,000 had vested within the last two years and was trading within a few percentage points of its vest date, with an embedded gain in the low five figures. Selling all of it would have generated a tax bill smaller than he’d assumed a single year’s trim would cost. He’d been holding a near-tax-free exit door shut because he assumed it was locked.

Where waiting actually pays off

This is the part worth being precise about, because it’s where the instinct to wait is exactly right. The other million dollars or so of his position had vested years earlier and had appreciated substantially since then, resulting in something close to $550,000 in long-term gains. For those shares, selling today would mean paying long-term capital gains tax, possibly at the top 20 percent rate plus the 3.8 percent net investment income tax, stacked on top of his already high working income.

So we don’t rush. The right move there is the one he’d half-intuited all along: hold them and time the sale to a lower-income year in early retirement, before Social Security and required distributions push his income back up, when that same gain can be taxed at 15 percent, or even zero. Waiting for a lower bracket on appreciated stock isn’t a myth; it’s good planning. He’d simply been applying it to the wrong shares and letting it freeze the ones he could have sold for almost nothing.

He’d been holding the shares he could sell for next to nothing, and bracing to pay full freight on the shares he was right to keep.

The plan we built

Once the positions were sorted by cost basis rather than treated as a single block, the plan almost wrote itself. We sold the freshly vested, low-gain lots first, taking a meaningful slice of concentration risk off the table at minimal tax cost. We put future vests on a 10b5-1 plan that sells them automatically near vest — converting equity to cash and diversifying the moment it lands, before a new near-tax-free exit door can swing shut and become an appreciated lot he’s afraid to touch. For the older, appreciated shares, we built a multi-year gain budget that defers those sales into his lower-income retirement years and harvests offsetting losses along the way. And the lowest-basis lots of all — the ones most expensive to ever sell — we earmarked for his charitable giving through a donor-advised fund, funding his giving with appreciated stock so that the gain is never taxed at all.

What changed

The change is that his concentration starts coming down immediately, not “someday, when the tax makes sense,” because for a large part of his position, the tax already made sense and always had. The appreciated shares he was genuinely right to hold now get held on purpose, with a plan to unwind them at the lowest possible rate, instead of being held by default out of a fear that didn’t apply to them.

He didn’t need to accept more risk to avoid a tax bill. He needed to stop letting one share’s tax story speak for all of them.

The concentration you’re holding by accident is just a risk. Concentration you’re holding on purpose, for a reason, is a decision.

If this sounds familiar

If you’ve been holding a concentrated stock position because you assume selling means a painful tax bill, it’s worth finding out which of your shares that’s actually true for. For freshly vested RSUs, the answer is often “barely any,” and the ones that do carry a real gain are usually the ones worth holding deliberately, not by default. That’s a conversation worth having with a fee-only fiduciary who’s paid the same whether you hold or sell.

Randa@RadiantWealthPlanning.com

These stories are based on real-life scenarios. Names and details have been changed. This content is for educational purposes only and does not constitute financial, tax, or legal advice.