By Eddie Tobler, Managing General Partner at West Coast Stock Transfer Corp
Most family offices treat December 31 as the Q4 tax deadline. It isn’t. The real deadlines land in October and November, while custodians, transfer agents and donor-advised fund sponsors still have time to move assets, and they pass without a memo. By the time a principal asks in mid-December what can still be done, the honest answer is usually “less than you’d like.”
Three decisions belong on the calendar now: how the family covers its estimated taxes, whether it bunches charitable gifts, and whether any qualified small business stock is about to cross a holding-period line.
Estimated payments reward early arithmetic
The fourth installment for 2026 is due January 15, 2027, and the useful decisions come well before it. The IRS treats a taxpayer as safe from the underpayment penalty after paying 90% of 2026 tax or 100% of 2025 tax, whichever is smaller. If 2025 adjusted gross income topped $150,000, the 100% becomes 110%. Most principals in this audience live in the 110% world, which turns the safe harbor into a known number. A family with a large gain this year can calculate that number today, pay exactly that, and hold the remainder in Treasury bills until April 15. The IRS gets its penalty-free minimum. The family keeps the carry.
Two mechanics get ignored. First, withholding is treated by default as paid in equal amounts on each due date, regardless of when it actually came out. A principal who’s behind in the fourth quarter can raise withholding on wages or, where the family holds pre-tax retirement balances, on a late-year distribution, and the Code spreads it across the year as though it had been paid on time. Second, the annualized income installment method matches installments to when income was earned. A November liquidity event shouldn’t generate a penalty for the first three quarters.
Trusts follow the same calendar and reach the 37% bracket at $16,000 of taxable income in 2026. A trustee who retains income pays the top rate on nearly all of it. Two elections give room after year end. Under Section 643(g), a trustee can treat estimated payments as the beneficiary’s, if elected by the 65th day after year end. Under Section 663(b), distributions made in the first 65 days can be treated as made in the prior year. Both depend on the trust instrument and on the trustee’s duties to the beneficiaries, and tax efficiency doesn’t outrank either one. Both also require somebody to remember them in February.
Bunching costs less when the floor applies once
Two changes took effect this year. Section 170 now allows itemized charitable deductions only above 0.5% of the contribution base, and Section 68 reduces itemized deductions by 2/37 for taxpayers in the 37% bracket. For most top-bracket donors, that holds the value of a marginal deduction to about 35 cents on the dollar. The Treasury will subsidize generosity at 35 cents, but it won’t subsidize regret.
The floor is where bunching earns its keep. On a $5 million contribution base, the first $25,000 of giving is disallowed in any year. Three annual gifts of $100,000 forfeit $75,000 to the floor. One $300,000 gift forfeits $25,000. That’s an illustration, and the arithmetic scales with the base. The SALT cap helps the case, too. It’s $40,000 rising 1% a year, phased down by 30% of modified AGI above $500,000, and back to $10,000 in 2030. By my math the phase-down reaches the $10,000 floor around $600,000 of modified AGI, so for high earners the itemizing decision comes down to what they give.
The mechanics are familiar. Fund a donor-advised fund in the high-income year, take the deduction when the gift completes, and grant over several years. Appreciated securities must clear before December 31, and sponsors often set earlier internal cutoffs, so ask yours now. Cash gifts face a 60% limit, and excess amounts carry forward five years.
QSBS clocks run in days
For stock acquired after July 4, 2025, Section 1202 now excludes 50% of gain at three years, 75% at four and 100% at five, with a per-issuer cap of $15 million or 10 times basis, and a $75 million gross assets ceiling. The earliest three-year mark on that stock arrives in mid-2028, so it isn’t a 2026 decision.
The 2026 issue is older stock. Shares acquired before the change keep the all-or-nothing five-year rule and a $10 million cap. A lot acquired in the last quarter of 2021 reaches five years by year end. Sell a week early and the exclusion on that lot is zero, an expensive way to be impatient. California adds a wrinkle, because the Franchise Tax Board’s instructions state that the state doesn’t conform to Sections 1045 and 1202. A California family owes state tax on the full gain, and that bill belongs in the liquidity plan.
What to do before Thanksgiving
Run year-to-date income against the safe harbor by mid-October and decide whether to pay, withhold or annualize. Ask each DAF sponsor for its securities cutoff, and decide on a bunched gift by early December. Pull every QSBS lot, record its acquisition date, and put the five-year anniversaries on the calendar next to any pending sale. Have the trustee calendar the 65-day elections now, while the memory is fresh. None of this takes more than an afternoon. Unfortunately, most families wait until December to find that afternoon.
Disclosure: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of West Coat Stock Transfer Corp. or any of their respective affiliates. This article is provided for general informational and educational purposes only and does not constitute investment advice, a recommendation, an offer to sell, or a solicitation of an offer to buy any security, financial product, or investment strategy. The information presented is believed to be reliable but is not guaranteed as to its accuracy, completeness, or timeliness. Any forward-looking statements or opinions are subject to change without notice.
Author Bio: Eddie Tobler is an issuer and shareholder focused professional with over a decade of experience in Corporate Actions, governance and shareholder communications. Specializing in Community and Regional Banking with an emphasis on banks transitioning to the public markets, as well as those involved in M&A activity.
