A client recently called with a straightforward request to withdraw funds from his investment account.
The number he gave us was oddly specific: just over $27,000.
When we asked why, the answer was simple. He wanted to give his daughter $20,000 as a wedding gift. After factoring in taxes, that was the amount he’d need to sell in order to net the full gift.
It’s a common approach, and on the surface, it makes perfect sense. Sell the investment, pay the taxes, and give the cash.
But it raises a better question:
Is selling the investment the best way to make the gift in the first place?
In this case, the investment had appreciated significantly over time. Selling it would trigger capital gains taxes, reducing the overall efficiency of the gift.
So instead, we took a different approach.
Rather than selling the investment, we transferred shares directly to his daughter.
No sale meant no immediate tax.
But more importantly, it shifted the tax question entirely.
When you gift an appreciated asset, the original cost basis carries over to the recipient. That means the embedded gain doesn’t disappear, but it may be taxed differently depending on who ultimately sells it.
In this case, his daughter and her new husband were in a lower income bracket. That gave them the ability to realize some—or potentially all—of the gain at a lower tax rate, and in certain cases, even at 0%.
The result?
The same $20,000 gift, but without triggering an unnecessary tax bill along the way.
This isn’t about finding loopholes or exploiting the system. It’s about understanding how different types of income are taxed and how those rules apply across a family, not just within a single account.
The original plan answered a reasonable question: How much do I need to sell to net $20,000 after taxes?
But a better question was: Do we need to sell anything at all?
That shift from calculation to strategy is where thoughtful planning can make a meaningful difference.
Because in many cases, it’s not just about what you give.
It’s about how you give it.