Small correction: the Federal government has a long-term capital gains tax that runs between 0%, 15%, and 20% depending on your gross annual income level and your filing status. State taxes (if any) are on top of this. Several states that I have paid taxes in don’t provide a long-term capital gains tax rate. The income is just taxed at the same rate normal income. That may vary by state, though.
There is an additional 3.8% federal net investment tax for income beyond a threshold that again depends on filing status.
Many online share traders will allow you to prioritize the sale of shares by tax lots. If you have some short shares and some long shares, you can specify the older tax lots to sell off and wait for the shares held for less than 1 year to reach that point.
If you assume that the share price will remain stable or increase over time, to minimize your overall tax payments, hold your short-term shares until they are long-term shares; consider splitting share sales across years to increase the percentage of shares sold in the 15% capital-gains tax rate.
Shares donated to a charitable organization can be deducted at their value on the date of transfer. Suppose you bought a million shares at 3 cents/share and gave that to a University or Foundation. Your $30,000 investment could produce a tax deduction of $1 million. However, there are limits to how much of this deduction can be claimed in the year of donation.
If a buyout occurs, you will owe taxes on all of the shares bought out on the date the buyout occurs. If the buyout is to be held early in the calendar year, consider selling half of your shares in December of the previous year and letting the other half be bought out. This will reduce your overall income tax liability. For a negotiated buyout price, the share price will be slightly lower than the buyout price as the buyout date nears.
But the advice to seek the services of a financial planner is wise especially if you expect to earn a 7-figure total from your sales.
