If you’re an executive at a publicly traded company, your financial life is rarely straightforward. Between RSUs vesting, stock options, blackout periods, and trading windows, your balance sheet is constantly evolving—and often heavily tied to your company’s stock.
That complexity creates risk. But it also creates opportunity.
One of the most effective—and often underutilized—strategies available to executives is tax-loss harvesting. When done proactively, it can reduce your tax bill, improve diversification, and create long-term flexibility in how and when you recognize income.
This isn’t just a year-end tactic. It’s a strategy that, when integrated into your broader plan, can materially improve after-tax outcomes over time.
What Is Tax-Loss Harvesting and How Does It Work?
Tax-loss harvesting is the process of selling investments in a taxable brokerage account that have declined in value to realize a loss for tax purposes.
Those losses can then be used to offset gains from selling appreciated investments, RSU share sales after vesting, stock option exercises, and portfolio rebalancing. There is no limit to how large a gain you can offset with a loss. For example, if you have $200,000 in long-term capital gains, you can harvest $200,000 in long-term capital losses to completely offset them.
However, if your losses exceed your gains, you can only offset up to $3,000 of ordinary income annually, with the remainder carrying forward indefinitely.
Why Tax-Loss Harvesting Matters More for Public Company Executives
Most investors can harvest losses on their own schedule. Executives generally can’t. RSUs vest on a fixed timeline, creating taxable events whether the timing is convenient or not. Option exercises often happen under deadline pressure—an approaching expiration date, a planned departure, or a company transaction. Each of these moments can generate significant taxable income, typically at the highest marginal rates.
Blackout periods add another layer of constraint. In the weeks surrounding earnings announcements, executives are locked out of trading their company’s stock entirely. The window to sell, rebalance, or diversify is narrower than it appears on paper.
A well-constructed tax harvesting strategy accounts for these challenges by capturing losses at optimal times so you’re not scrambling at year-end with limited options.
Using Tax-Loss Harvesting to Diversify Concentrated Company Stock
Many executives also accumulate significant company stock positions over time. But selling those shares to diversify your portfolio often triggers large capital gains taxes.
By pairing gains from selling company stock with harvested losses elsewhere, you can reduce or offset the tax impact and diversify more efficiently.
Building a Capital Gains Strategy in Retirement
In retirement, income shifts from W-2 wages to more controllable 1099 income sources such as consulting or portfolio withdrawals. Capital gains are taxed at 0%, 15%, or 20%, and high earners may also face the 3.8% Net Investment Income Tax (NIIT).
This creates an opportunity to build a “capital gains budget,” where you intentionally manage how much income and gains you recognize each year.
Tax-loss carry-forwards further enhance this by offsetting gains and smoothing income across years.
Here’s an example of how that might play out in practice. An executive retires with a concentrated position of company stock and plenty of unrealized gains. As part of a diversification plan, they decide to take a $150,000 long-term capital gain.
Elsewhere in their portfolio, a broad technology ETF has declined $80,000 from its cost basis. By selling that ETF and immediately buying a similar-but-not-identical fund (maintaining market exposure without triggering the wash-sale rule) the taxable gain drops from $150,000 to $70,000. At a combined federal rate of 23.8% (20% capital gains plus 3.8% NIIT), that single move generates roughly $19,000 in tax savings.
Any unused losses carry forward to offset future gains in subsequent years.
The Wash-Sale Rule
One important constraint: the wash-sale rule prevents claiming a loss if you repurchase the same or substantially identical security within 30 days.
To avoid this, a typical strategy often involve reallocating into investments with similar market exposure but that are not considered substantially identical, in an effort to maintain exposure while avoiding wash-sale treatment
The Bottom Line
Tax-loss harvesting allows executives to turn market volatility into a tax advantage, reduce concentration risk, and improve long-term outcomes when used proactively as part of a broader financial strategy.
At Tempo Wealth, our goal is to be a trusted resource with structured, principles-based planning for maximizing equity compensation—both during “business-as-usual” planning and in surprise moments like variable compensation and retirement income planning. If you’d like us to review your current holdings, model the after-tax impact, and build an equity-comp strategy aligned with your goals, reach out for a consultation. Call 440-568-3676 or email info@tempowealth.com.
Disclosures
Tempo Wealth, LLC ("Tempo") is a Registered Investment Advisor registered with the Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
The information contained in this material is intended to provide general information about Tempo and its services. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services are provided solely to read about our investment philosophy and our strategies. You should not rely on any information provided on our web site in making investment decisions. Market data, articles and other content in this material are based on generally available information and are believed to be reliable. Tempo does not guarantee the accuracy of the information contained in this material. Tempo will provide all prospective clients with a copy of our current Form ADV, Part 2A (Disclosure Brochure) prior to commencing an advisory relationship. However, at any time, you can view our current Form ADV, Part 2A at adviserinfo.sec.gov. In addition, you can contact us to request a hardcopy.
This article discusses general planning considerations and does not take into account any individual’s specific financial situation. Strategies discussed may not be appropriate for all investors. Examples are provided solely to illustrate a common planning scenario for executives that are eligible for Deferred Compensation plans.
