The Charitable Remainder Trust Strategy That Lets a 68-Year-Old Sell a $2.4 Million Concentrated Stock Position Without Triggering a $480,000 Tax Bill

A 68-year-old retired executive sits on $2.4 million of a single stock, likely shares from a long-ago IPO or decades at a former employer. Her cost basis is $180,000, meaning roughly $2.22 million of embedded long-term capital gain. She wants to diversify, generate retirement income, and eventually leave something to her alma mater and a community foundation. What she does not want is to mail the IRS a check for nearly half a million dollars on the way out.

Variations of this question surface constantly on the Bogleheads forum and r/fatFIRE, usually phrased as some version of “I have one stock that ate my portfolio, and I can’t sell without getting destroyed on taxes.” The charitable remainder unitrust, governed by IRC Section 664, is the tool most often missed by readers who are not already working with an estate attorney.

The Situation in One Block

• Age: 68, retired, in good health
• Concentrated position: $2.4M market value, $180K basis
• Embedded long-term gain: $2.22M
• Charitable intent: Yes, but not the full position
• Liquidity needed from principal: None expected

The Tax Friction Is the Whole Story

The only financial tension that matters is the gap between selling in a taxable account versus a tax-exempt structure. Run the direct-sale math at the top 20% federal capital gains rate, plus the 3.8% NIIT, plus a representative 5% state levy. On $2.22 million in gains, that is roughly $640,000 in combined tax. She nets $1.76 million to reinvest.

Now, route it through a charitable remainder unitrust. She contributes appreciated shares to the CRUT. The trustee sells inside the trust, and because the CRUT is a tax-exempt entity under Section 664, the full $2.4 million is reinvested tax-free. She avoids the immediate capital gains hit, picks up a charitable income tax deduction (the present value of the remainder, using the IRS Section 7520 rate), and captures income tax savings spread over six years.

The transaction timing matters significantly. Section 7520 rates are set at 120% of the mid-term AFR, which, for May 2026, is 5.0%. Higher rates generally produce larger charitable deductions, which is why the current environment, sitting near the 96th percentile of the trailing year, is exceptionally favorable.

Three Paths That Actually Move the Needle

1. Sell outright and reinvest. It’s simple, fully liquid, and flexible. She keeps total control, but the $640,000 tax bill and zero deduction are the steep price. This is best if she might need that principal for medical care or family support.
2. Fund a 5% CRUT with the full position. The trustee sells the property tax-free and receives $120,000 in year one, with annual payments based on the trust’s value. Over a 17-year life expectancy, cumulative income hits roughly $2.04 million. Distributions are taxed in tiers, so early years often carry favorable capital gains treatment. Total tax savings reach roughly $480,000. The catch? It is irrevocable; the principal is gone the moment she signs.
3. Split the position. Contribute $1.2M to a CRUT and sell the other $1.2M outright. She cuts her tax bill by half, keeps real liquidity, and still secures a meaningful deduction. This is the “Goldilocks” path for readers who are uncertain about future cash needs and want a balanced approach.

What to Evaluate First

The decision that drives 80% of the outcome is liquidity, and if she has a separate seven-figure portfolio, a paid-off home, and predictable retirement spending well below her income sources, the CRUT math is decisive. If she might need the $2.4M for a long-term care event or to help adult children, the split approach fits better, preserving liquidity while still capturing a partial deduction.

The common, costly mistake is selling the position first, paying the $640,000 in tax, and then funding a smaller charitable vehicle with the leftover cash. That sequence permanently destroys the deduction value of the appreciated shares. Once realized, the gain cannot be unwound. The CRUT applies only when unsold, low-basis stock enters the trust.