---
title: LTax Case Study | Reducing Concentration and Raise Liquidity
description: Corporate executive seeking guidance regarding options exercise alternatives to reduce concentration and raise liquidity.
---

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- About 
    - [About LTax](https://ltaxconsulting.com/about)
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# Case Study

How we helped a corporate executive understand her compensation program and develop a strategy for tax efficient diversification.

## Subject

Incentive Stock Options (ISO) and Non-Qualified Stock Options  
(NQSO) in medical device company with a value of ~$13MM.

## Objectives

- Develop tax efficient stock option plan.
- Reduce concentrated stock exposure.
- Raise liquidity for retirement planning.
- Formulate Income tax mitigation strategy.

## Process

- L-Tax Team: Created formulas to simulate multiple exercise/sell strategies with tax liability and after-tax liquidity. These projections included analysis considering both current IRS Code and potential implications relating to Biden Administration's proposed code changes. 
- Wealth Planning Team: Compiled all personal and financial information generating a comprehensive “base-line” financial plan LAWP used as the foundation for all strategy decisions.
- Estate and Trust Team: Assessed estate plan and advised on trust structure options related to charitable giving.

## Strategy

- Recommended immediate exercise and sale of NQSOs which accounted for 5% of total options value due to stock volatility.
- Identified the amount of ISOs that could be exercised and sold without exposure to Alternative Minimum Tax (AMT). Recommended immediate execution of identified amount to further reduce portfolio risk.
- Resulting liquidity was used to initiate funding of diversified portfolio in accordance with financial plan.  
- Recommended Donor Advised Fund (DAF) to address philanthropic interests and reduce income tax liability.
- Implemented Qualified Opportunity Zone investment to further mitigate income tax liability and exposure to net investment income tax (NIIT).
- Ongoing consultations: Regularly consult with client regarding regulatory and tax environment providing scenario analysis related to additional exercise and sales. Reconvene after every bulk sale to update figures and projections.

## Results

Client has structure and process around decision-making for exercised options and remaining ISOs. Funding of retirement and financial plan has been initiated. Portfolio risk has been significantly reduced.

**Estimated tax savings: $437,179.00**

Client has structure and process around decision-making for exercised options and remaining ISOs. Funding of retirement and financial plan has been initiated. Portfolio risk has been significantly reduced.

**Potential tax savings: $437,179.00**

### LTax is a boutique tax firm emphasizing personalization, communication, and initiative-taking responsiveness.

We take a consulting approach to tax preparation and planning, ensuring regular client communication and a personalized understanding of our clients’ needs. We tirelessly research tax mitigation strategies and develop actionable recommendations for the benefit of our clients.

 

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![adam-v2-700](https://ltaxconsulting.com/hubfs/adam-v2-700.png)

Adam Raschke, JD

Director, Tax Practice Lead

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