Di Bello Financial

Managing Concentrated Stock Positions Without Additional Tax

By Annette Di Bello, CPA / PFS, CFP® | August 25, 2026

The Challenge

A highly appreciated stock position can create significant wealth—but also significant company-specific risk and potential capital gains taxes when diversifying.

Our Objective

Reduce excessive concentration while balancing:

Investment risk
Capital gains taxes
Retirement and cash-flow needs
Charitable and estate planning goals

Strategies We May Consider

Gradual DiversificationReduce concentrated positions strategically over multiple tax years when appropriate.

Tax-Loss & Tax-Gain PlanningCoordinate realized gains with available losses and potentially lower-income tax years.

Charitable GivingConsider gifting appreciated securities directly to qualified charities or donor-advised funds.

Executive CompensationCoordinate RSUs, stock options, and future equity awards with the diversification strategy.

Strategic ReinvestmentReinvest proceeds into a diversified portfolio aligned with the client's risk, income, tax, and long-term objectives.

Estate Planning CoordinationEvaluate whether retaining, selling, gifting, or donating appreciated securities better supports long-term family and legacy objectives.

Key Principle

Taxes matter—but tax avoidance should not become the investment strategy.
The potential tax cost of diversification should be weighed against the financial risk of maintaining excessive exposure to a single company.

The Goal

Preserve the wealth a successful investment helped create without allowing one stock to put too much of that wealth at risk.

About the Author

Annette Di Bello, CPA/PFS, CFP® is the Founder and President of Di Bello Financial, a fee-only Registered Investment Advisor headquartered in Mission Viejo, California.

With nearly four decades of experience in accounting, taxation, financial planning, and investment management, Annette specializes in helping high-net-worth individuals and families, business owners, executives, physicians, and retirees coordinate investment decisions with tax strategy and long-term financial planning.

As both a Certified Public Accountant (CPA) with the Personal Financial Specialist (PFS) credential and a CERTIFIED FINANCIAL PLANNER® professional, Annette brings an integrated perspective to portfolio management, executive compensation, retirement planning, tax strategy, estate planning coordination, and wealth preservation.

Di Bello Financial serves clients throughout Orange County, Los Angeles County, San Diego County, and other states where permitted by law.

Important Disclosure

This article is provided for informational and educational purposes only and should not be construed as individualized investment, tax, accounting, or legal advice. Examples and strategies are illustrative and may not be appropriate for every investor. Tax laws and regulations are subject to change. Readers should consult their own qualified professional advisors regarding their individual circumstances.

Investment advisory services are offered through Di Bello Financial, a California Registered Investment Advisor. Registration does not imply a certain level of skill or training. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

Tax information is general in nature and is not intended as tax advice. Consult your tax professional regarding your individual circumstances.

Tax Planning for Restricted Stock Units (RSUs)

Executive Planning Scenarios

Tax Strategy

Investment Management

Retirement Planning

Read Full Article About Concentrated Stock Tax Strategy

Tax Planning for Restricted Stock Units (RSUs)

Executives: By Annette Di Bello, CPA / PFS, CFP® | July 5, 2026

Restricted Stock Units can create significant compensation value, but they may also lead to unexpected taxes and excessive exposure to company stock.

Key planning considerations include:

Reviewing projected taxable income before RSUs vest
Evaluating whether employer withholding will cover the actual tax liability
Making estimated tax payments when additional withholding may be insufficient
Deciding whether to hold or sell vested shares
Diversifying concentrated company-stock positions
Managing capital gains, losses, and charitable gifting opportunities
Coordinating RSUs with cash flow, retirement contributions, and long-term investment goals

Planning before vesting can help reduce tax surprises and support more disciplined investment decisions.
Di Bello Financial helps executives and high-income employees integrate RSU taxation, diversification, and investment planning into a comprehensive wealth-management strategy.

Important Disclosure: This article is provided for educational and informational purposes only and should not be construed as investment, tax, legal, or accounting advice, or as a recommendation to buy or sell any security. Every individual’s financial situation is unique. You should consult with qualified professionals before making financial, investment, or tax decisions. Past performance does not guarantee future results.

About the Author

Annette Di Bello, CPA, PFS, CFP® helps corporate executives navigate the tax and financial planning complexities of equity compensation, retirement planning, and investment management. As Founder and President of Di Bello Financial, she integrates tax strategy with long-term wealth management to help clients make informed financial decisions.

Read Full Article about Tax Planning for RSUs

Executive Equity Compensation

Taxation on Employee Stock Options

By Annette Di Bello, CPA / PFS, CFP® | July 5, 2026

Employee stock options are subject to various tax treatments based on their classification. The two primary types are Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NSOs). Each type triggers different tax events and has distinct implications.

Incentive Stock Options (ISOs)

1. No Ordinary Income on Exercise (Potential Alternative Minimum Tax Impact):

• There is no regular income tax upon exercising an ISO; however, the bargain element—the difference between the fair market value at exercise and the option price—may be included for alternative minimum tax (AMT) purposes.

• If the employee meets holding period requirements—holding the stock for at least one year after exercise and two years after grant—the eventual gain on sale is treated as long-term capital gain.

• A disqualifying disposition (selling before meeting these requirements) results in taxation of the bargain element as ordinary income, with any additional gain possibly taxed as a capital gain.

2. Holding Period Requirements:

• Maintaining proper holding periods is crucial for achieving favorable long-term capital gain treatment, instead of the ordinary income treatment that applies to a disqualifying disposition.

Non-Qualified Stock Options (NSOs)

1. Ordinary Income at Exercise:

• Upon exercise, the bargain element (fair market value at exercise minus the exercise price) is included in the employee’s ordinary income. This amount is reported on the employee’s Form W-2, and the employer can take a corresponding deduction.

2. Subsequent Sale of Shares:

• Any subsequent appreciation or depreciation from the time of exercise to sale is treated as a capital gain or loss, depending on the holding period post-exercise. The holding period for NSOs begins at the time of exercise.

Key Considerations

Tax Timing:

• ISOs do not trigger immediate ordinary income upon exercise (except potential AMT issues), but NSOs do trigger ordinary income at the time of exercise.

Bargain Element:

• The bargain element is the key figure—the difference between the fair market value of the stock at exercise and the option price. For ISOs, adhering to proper holding periods can defer the ordinary income characterization, while for NSOs, the bargain element is immediately taxable as ordinary income.

Plan Requirements & Disqualifying Dispositions:

• Specific plan document provisions and disqualifying dispositions (failure to meet holding periods) affect whether a portion of the income is treated as ordinary income (for ISOs) or solely as capital gain.

Summary

For ISOs, exercising typically doesn’t trigger immediate income tax, but the bargain element may impact AMT, and a sale must comply with holding period rules to benefit from long-term capital gain treatment. For NSOs, the bargain element is taxed as ordinary income at exercise, with subsequent sales yielding capital gains or losses based on the holding period post-exercise.

This structured approach helps illustrate both the timing and nature of the taxable events associated with employee stock options, drawing on statutory provisions and IRS regulations.

About the Author

Executives

In This Guide

Managing Concentrated Stock Positions Without Additional Tax

By Annette Di Bello, CPA / PFS, CFP® | August 25, 2026

The Challenge

Our Objective

Strategies We May Consider

Key Principle

The Goal

About the Author

Important Disclosure

Tax Planning for Restricted Stock Units (RSUs)

Executives: By Annette Di Bello, CPA / PFS, CFP® | July 5, 2026

Executive Equity Compensation

Taxation on Employee Stock Options

Ready to Take the Next Step?

Executives

In This Guide

Managing Concentrated Stock Positions Without Additional Tax

By Annette Di Bello, CPA / PFS, CFP® | August 25, 2026

The Challenge

Our Objective

Strategies We May Consider

Key Principle

The Goal

About the Author

Important Disclosure

Tax Planning for Restricted Stock Units (RSUs)

Executives: By Annette Di Bello, CPA / PFS, CFP® | July 5, 2026

Executive Equity Compensation

Taxation on Employee Stock Options

Ready to Take the Next Step?

This website uses cookies.