Tax-aware wealth management

Samah Naguib, CFA® · Fee-only fiduciary · Pleasanton, CA

Portfolios are usually judged on pre-tax returns. California high earners live on after-tax returns. Tax-aware management treats taxes as a cost to be engineered down, decision by decision, the same way a careful investor manages fees and risk.

54.1%Top combined marginal rate on ordinary interest income for a California resident (37% + 3.8% + 13.3%).

37.1%Top combined rate on long-term gains: 20% federal + 3.8% NIIT + 13.3% California, which taxes gains as ordinary income.

$3,000Net capital losses that can offset ordinary income each year, with the rest carried forward.

1. Tax-loss harvesting, applied systematically

When a holding falls below its cost, we can sell it to realize the loss and immediately buy a similar, but not substantially identical, investment so market exposure stays in place. Harvested losses offset realized gains, then up to $3,000 of ordinary income a year, and the remainder carries forward. We track the 30-day wash-sale window across your accounts, including IRAs, so the loss is not disallowed.

2. Asset location across account types

The same investments can produce different after-tax results depending on where they sit. As a general framework, tax-inefficient holdings such as taxable bonds and actively traded strategies belong in IRAs and 401(k)s; broad, low-turnover equity funds and California municipal bonds belong in taxable accounts; and the highest-growth assets are candidates for Roth accounts. The right answer depends on your balances and time horizon, so we model it for your household.

3. Gain management and lot selection

We choose which tax lots to sell, favor long-term over short-term gains, set an annual gain budget when repositioning a concentrated or legacy portfolio, and avoid unnecessary turnover. For business owners holding a large position in one stock or fund, we map out a multi-year plan instead of a single taxable sale.

4. California municipal bonds for the fixed-income core

For taxable accounts, interest from California municipal bonds is generally exempt from both federal and California income tax for residents. We build individual-bond ladders, favoring non-callable general-obligation issues. See how a California muni ladder works.

5. Charitable and Roth strategies

Donating appreciated securities rather than cash, bunching gifts through a donor-advised fund, and timing Roth conversions in lower-income years (for example, after a business sale or before required distributions begin) can each reduce lifetime taxes. We identify the opportunities and coordinate the execution with your CPA.

6. Coordination with your CPA, before year-end

Tax-aware investing only works if it is coordinated. We share realized gains and losses with your CPA during the year, not after it, so estimated payments and planning decisions are made with current numbers.

Questions

What is tax-loss harvesting?

Tax-loss harvesting is selling an investment that has fallen below its purchase price to realize a capital loss, then reinvesting in a similar but not substantially identical investment to keep market exposure. The realized loss can offset capital gains and up to $3,000 of ordinary income per year, with unused losses carried forward.

Does California tax capital gains differently?

California taxes capital gains as ordinary income, at rates up to 13.3% for the highest earners, and does not have a lower long-term capital gains rate. That makes gain management and tax-loss harvesting especially valuable for California residents.

What is the wash-sale rule?

The wash-sale rule disallows a loss if you buy the same or a substantially identical security within 30 days before or after the sale, including purchases in IRAs. Harvesting must be coordinated across all of your accounts to avoid it.

What is asset location?

Asset location is deciding which investments to hold in taxable, tax-deferred and tax-free accounts so that the household's total after-tax return is higher, without changing its overall allocation.

Do you replace my CPA?

No. Pleasanton Wealth does not prepare tax returns or give tax advice. We manage the portfolio with taxes in mind and coordinate with your CPA, who remains responsible for your tax filings.

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General educational information as of September 2026; tax rules change. Not individualized investment, tax or legal advice. Pleasanton Wealth does not provide tax or legal advice; we coordinate with your CPA and attorney. Tax-loss harvesting and diversification do not ensure a profit or protect against loss.