Selling Nvidia – Capital Gain Deferral and Elimination

Understanding Capital Asset Sales

Clients have different reasons to sell a “capital asset”. Sometimes they want to sell for the sole purpose of diversifying their holdings. Other times, they are selling because they are exiting a business because of retirement or they simply want to sell at the top of the market. Whatever the reason they want to sell a capital asset, they are often looking for strategies that allow them to defer the capital gains or they want to try to eliminate the capital gains.

The rules are quite different depending on whether they are selling real estate vs. selling stocks (either publicly traded stocks or stocks in a closely held business). This article will focus on selling stock, whether it is closely held stock or publicly traded stock.

Why Many Clients Are Focused on Nvidia Stock

Many of our clients are coming to Dana Whiting Law from Silicon Valley, and they have large positions in Nvidia. They have seen our videos on YouTube and are looking for tax attorneys who have a significant amount of experience in both saving estate taxes on death and saving capital gains tax when they diversify their Nvidia holdings.

Charitable Remainder Trusts (CRTs) for Capital Gain Deferral

Most people are familiar with, or should become familiar with, the Charitable Remainder Trust as a tool to defer capital gains and spread the gain from a diversified position over the lifetime of the client and his or her spouse.

We have several videos on our YouTube channel addressing the capital gain deferral technique available using CRTs. This strategy is very popular when a client wants to diversify their potential “stock risk” of holding an extremely large position in one stock.

Exchange Funds: Diversify Without Triggering Capital Gains

Another very common technique to diversify a stock position without incurring capital gains is the “exchange fund”. This allows the client to transfer their large position in one stock into a diversified stock portfolio in exchange for a percentage of that fund.

There are some restrictions within the fund that may limit your timing of exiting, and many of the exchange funds out there are not currently accepting Nvidia as part of the exchange.

Installment Sale to a Non-Grantor Trust (IRC Section 453)

Capital gain deferral can also be achieved if a client uses an Installment Note and makes a sale of the asset to a Non-Grantor Trust. If the stock is publicly traded, it must be placed inside an LLC, and a “slice” of the LLC is sold to the Non-Grantor Trust.

Capital gains are recognized but spread over the lifetime of the payments coming back to the client in the form of an installment note, as allowed under Internal Revenue Code §453. Many times, this 453 Trust is structured in favor of family members or even a spouse, but it cannot favor the seller directly.

The Trust receives a “stepped-up cost basis” in the stock purchased, then sells the large position for a diversified portfolio. In the end, the client has a diversified portfolio inside the Trust, but the capital gains are spread over installment payments.

Because these are related-party transactions, the second sale of the stock for cash must be delayed for two years. This means the client begins recognizing capital gains before the Trust receives cash, requiring the Trust to have enough liquidity or income to service the note.

Trade-Offs of Capital Gain Deferral Strategies

What you are seeing with these capital gain deferral strategies, like with most tax savings strategies, there are trade-offs between the benefits of tax deferral against something you have to give up.

With the Charitable Remainder Trust (CRT), the remainder interest passes to charities, not heirs.
With the Exchange Fund, you may have timing limitations.
With the Section 453 Installment Trust, you must recognize two years of capital gains before diversification.

Most of the time, the tax deferral benefit will far outweigh these setbacks. Tax planning is rarely “one magic wand” — it’s best achieved through multiple, complementary strategies.

Capital Gain Elimination: The “Uncle Murray Provision”

Now I want to focus my discussion on a potential capital gain elimination strategy using what we call an “Uncle Murray Provision” inside of an Irrevocable Trust set up for your spouse (SLAT) or your children (GST Trust).

The Uncle Murray strategy is complex, so for a full explanation, visit our YouTube channel and watch the “Uncle Murray Video”.

Essentially, this strategy allows you to capture the economic benefit of another person’s $14 million Federal Estate Tax Exemption. When “Uncle Murray” passes away, the Trust receives a new stepped-up cost basis in its assets — meaning those assets can be sold immediately after death with zero capital gains, even though the Trust assets remain for the benefit of your spouse and children.

Some tax attorneys refer to this as an “unsubscribed general power of appointment.”

Combining Strategies for Maximum Benefit

You can combine the above strategies to receive a diversified portfolio before the death of Uncle Murray and then a stepped-up cost basis after his passing.

For example, we are currently implementing this strategy for a client with a large position in a publicly traded stock. We created a SLAT for the client’s spouse, placed an exchange fund inside it, and diversified without recognizing gains. Inside the SLAT is a 93-year-old “Uncle Murray” beneficiary — and at his death, the fund receives a stepped-up cost basis equal to its market value at that time.

After required time periods expire, the new basis is allocated to the 20–30 positions in the fund, so future sales only recognize gains above the stepped-up value.

Why Silicon Valley Clients Choose Dana Whiting Law

With these strategies that we are embracing as a law firm, it is no wonder that many of our clients are coming out of Silicon Valley. Many of them have large positions in Nvidia stock and wish to diversify for a more balanced portfolio.

As noted above, it can be challenging to find an exchange fund that accepts Nvidia. We work closely with several financial planners in the San Jose area who are experienced with these strategies and can help us locate qualifying exchange funds.

Strategic Planning for Long-Term Tax Efficiency

Selling a highly appreciated asset like Nvidia stock requires careful tax planning and experienced guidance. While there are several tools available — including Charitable Remainder Trusts (CRTs), Exchange Funds, and Installment Sale Trusts (IRC §453) — each comes with its own structure, benefits, and trade-offs. When paired with advanced estate strategies such as the “Uncle Murray Provision”, these tools can not only defer but, in some cases, eliminate capital gains altogether.

At Dana Whiting Law, we help clients identify the right combination of strategies based on their financial goals, family needs, and long-term estate plans. Whether you’re seeking to diversify a concentrated stock position, protect family wealth, or reduce your tax exposure, the key is to act proactively — before a sale or market event triggers unnecessary tax consequences.

No two clients are the same, and no single strategy fits all. With thoughtful planning and coordinated execution between your attorneys, CPAs, and financial advisors, it’s possible to preserve more of what you’ve worked so hard to build.

Schedule a Consultation with Dana Whiting Law

If you hold a large position in Nvidia or another appreciated stock and want to explore strategies for capital gain deferral or elimination, we invite you to schedule a confidential consultation with our team. Our attorneys have extensive experience helping high-net-worth clients across Arizona, California, and beyond implement sophisticated tax and estate solutions.

📞 Call today or reach out online to schedule your consultation and start planning a tax-smart path toward diversification, protection, and long-term financial peace of mind.

Selling Nvidia – Capital Gain Deferral/Elimination

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