Borrow, sell, or give: three ways out of a concentrated position
A large low-basis holding creates one question with three answers. Each changes your tax bill, your risk, and your flexibility in a different direction.
September 12, 20267 min read
One stock, one property, or one business becomes most of the balance sheet, and every path out has a cost. The tax bill is only one of them — concentration risk, liquidity, and flexibility all move at the same time. This is educational, not a recommendation about any security or asset.
Selling: pay the tax, remove the risk
The simplest answer is often the right one. A concentrated position can fall further than the tax you were trying to avoid, and timing gives you more control than most people use.
Choose the year deliberately — a low-income year, a sabbatical, or a year with harvested losses available.
Sell in tranches rather than all at once if the decision is emotionally hard.
Loss carryovers from prior years can absorb a meaningful part of a gain.
Borrowing: keep the asset, add a new risk
Borrowing against a position creates liquidity without a sale. It also creates a margin obligation that does not care why the asset fell.
Interest cost and rate changes make this a financing decision, not a tax trick.
A forced sale during a decline is the exact outcome the strategy was meant to avoid.
Size the loan against a severe decline scenario, not the current price.
Restructuring: diversify or defer
Several structures exist between selling and holding. Each one trades liquidity or control for diversification or deferral.
Exchange funds pool concentrated holdings for diversified exposure, with multi-year lock-ups.
Qualified Opportunity Zone funds can defer a gain in return for a long holding period and real project risk.
A charitable remainder trust can convert an appreciated asset into an income stream with a charitable remainder.
Deciding well
Write down what the money is for before choosing a path. A position you are holding out of habit is a different problem from one you are holding for a reason.
Ask what happens to your plan if this asset drops 50% and stays there.
Compare after-tax outcomes across a realistic range, not just the best case.
Bring a CPA and, where a trust or structure is involved, an attorney into the decision before you commit.
Educational guidance, not personal advice. Outputs are illustrative, may contain errors, and should be independently verified before material decisions.
