Asset Inputs
Tax Inputs
Time horizon in years

Horizon: 20.00

1.00 50.00
Value of current unrealized capital gain as % of total portfolio value

Unrealized Gain In Portfolio: 35.0%

0% 99%
The risk-free (or minimum-risk) nominal interest rate

Nominal Risk-free Rate: 1.5%

0% 10%
The long-term capital gains rate prevailing today

Current Capital Gains Tax Rate: 30.0%

0% 99%
Annual expected nominal return on the risky asset to the specified Horizon

Nominal Expected Asset Return: 6.0%

0% 25%
The tax rate expected in the future for long-term capital gains

Future Capital Gains Tax Rate: 50.0%

0% 99%
Annual standard deviation of risky asset returns

Risky Asset Volatility: 18.0%

1% 100%
The probability at the Horizon that the risky asset will be realized in a taxable manner (e.g. sold instead of bequested or inherited)

Probability of Taxable Realization: 100.0%

0% 100%
The risk-aversion coefficient given CRRA utility (2-3 is a reasonable range)

CRRA Risk Aversion: 2.00

1.00 5.00
The tax rate on dividends

Future Dividend Tax Rate: 50.0%

0% 100%
The risky asset's current dividend yield (annual)

Dividend Yield: 2.0%

0% 25%
The tax rate on interest

Future Interest Tax Rate: 50.0%

0% 100%
The % of the total portfolio held in the risky asset

Current risk-asset allocation: 70.0%

0% 100%
The extent to which a realized loss creates a tax asset for a very short Horizon. 0 = no asset value, 1 = asset valued at 100% gain offset.

Realized loss value (%): 0.0%

0% 100%
The period over which the realized loss value linearly decays from its starting value to zero.

Realized Loss Decay Time: 20.00

1.00 50.00

Early Realization Calculator

When capital gains rates are expected to go up, is it better to realize gains and pay tax now, or defer and pay tax at a higher rate in the future? The answer depends on many variables, with horizon often being the most critical. This calculator jointly solves for the amount of gain to realize today, and the allocation to the risky asset going forward, which maximize the investor’s risk-adjusted wealth. Please don’t hesitate to be in touch with any questions or suggestions.

This calculator is for information purposes only, and should not be construed as tax advice.

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Expected Wealth Gain to Horizon (Risk-Adjusted):

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