Quick Read
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Zuckerberg's fortune tops $200 billion; he and Priscilla Chan pledged in 2015 to give away 99% of their shares, then worth about $45 billion.
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1,000 Facebook shares bought at the $38.23 first-day close in 2012 are worth $610,150; held until death, heirs owe no tax on the $571,918 gain.
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Giving the shares to two children now would cost them about $85,788 in tax; trimming 200 shares a year cuts the risk for $87,725 over five years.
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Mark Zuckerberg's fortune now tops $200 billion, Fortune reported on Nov 7, and Forbes' real-time list put it at $209.7 billion the same day. He and Priscilla Chan promised in 2015 to give away 99% of their Facebook shares during their lifetimes, a stake worth about $45 billion when they wrote the open letter that launched the Chan Zuckerberg Initiative. Their three daughters are not slated to inherit most of it.
Tom Reilly, 71, a retired engineer, owns a far smaller piece of the same company. He bought 1,000 Facebook shares at the $38.23 first-day close on May 18, 2012, and never sold. At Friday's $610.15 close they are worth $610,150, a $571,918 gain, 16.0 times his money, and 25.4% of the $2,400,000 he and his wife Janet, 68, have saved. The shares sit in a regular brokerage account, and Tom wants their two adult children to get the most out of them.
The short answer:holding the shares until death beats giving them to the kids now by $85,788, because inherited shares in a taxable account get a fresh cost basis at death, while shares given during life carry Tom's $38.23 basis and his tax bill with them. Federal estate tax is not his problem at $2,400,000 against a $15,000,000 per-person exclusion. The real decision is how much of one stock to keep, and for the Reillys the answer is to trim 200 shares a year. If your own shares are a big slice of your savings, the same math applies to you.
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Step-up versus carryover basis, in plain words
When you die holding shares in a taxable account, your heirs' cost basis is generally the share price on the date of your death (IRS Publication 551). If the children inherited the shares at Friday's price, their basis would be $610,150, and selling the next day would produce no taxable gain. The $571,918 built up over 14 years is never taxed. When you give shares during your life, the recipient takes your basis, $38.23 in Tom's case, and owes tax on the whole gain whenever they sell.
Two caveats. An IRA gets no step-up, and most non-spouse heirs must empty an inherited IRA within 10 years, so the ranking below only holds if your shares are in a regular account. For a married couple, usually only the half owned by the spouse who dies steps up at the first death; in community property states, both halves can (Publication 555).
Estate tax is separate. The 2026 exclusion is $15,000,000 per person. The Reillys' $2,400,000 is 16% of one spouse's exclusion, and unless your estate is far larger, the income tax on the gain is the number that matters to you.
Five choices and what each costs Tom
Every figure uses Friday's $610.15 close and the couple's $137,500 AGI and $90,000 taxable income before any sale.
| Choice (1,000 shares, $610,150) |
Federal tax on the gain |
Left for the family |
|---|---|---|
| A. Sell all 1,000 shares now |
$107,816 |
$502,334 |
| B. Sell 200 shares a year for five years |
$87,725 |
$522,425 |
| C. Hold until death (heirs get the step-up) |
$0 |
$610,150 |
| D. Give the shares to the two children now |
$85,788 |
$524,362 |
| E. Give 100 shares to a donor-advised fund |
$0 on those shares |
$61,015 goes to charity |
At Friday's $610.15 close; married filing jointly, 2026 rules; D assumes the children pay 15%; state tax left out.
Option A: sell all 1,000 shares now.Added federal tax of $107,816, which is 18.9% of the gain, leaving $502,334. The gain runs into the 20% bracket above $613,700 of taxable income, adds the 3.8% net investment income tax, and wipes out the $6,000-each senior deduction. It fits you if you cannot sleep with a quarter of your savings in one stock.
Option B: sell 200 shares a year for five years.Each sale moves $122,030 of stock with a $114,384 gain and costs $17,545 in tax. The total is $87,725, or 15.3% of the gain, and the couple keeps $522,425, which is $20,091 less tax than selling at once.
Option C: hold until death.Tax on today's $571,918 gain is $0, there is no federal estate tax, and the children receive the shares at whatever they are worth on that day. It fits you if you will never need the money and can absorb a big drop.
Option D: give the shares to the two children now.Each child gets $305,075, which is $286,075 over the $19,000 annual gift exclusion per recipient, so Tom files a gift tax return but owes no gift tax. Each child's gain is $285,959, and at the 15% rate they owe $85,788 together, keeping $524,362. That is $85,788 the family would not owe if Tom held the shares until death.
Option E: give 100 shares to a donor-advised fund.The $61,015 gift carries a $57,192 gain, and nobody pays the $8,579 of capital gains tax on it. The deduction is capped at 30% of AGI, $41,250 this year, with $19,765 carried forward for up to five years. It fits you if you already give to charity in cash: give the shares and keep the cash.
The risk the step-up cannot fix
The step-up is only worth as much as the shares on the day of death. From the Sept 2021 high close of $382.18 to the Nov 2022 low close of $88.91, Tom's 1,000 shares fell from $382,180 to $88,910, a $293,270 drop, or 76.7%. Today the position is $179,850 below its value at the Aug 2025 record close, and the stock is down 7.6% in 2026.
A repeat of a 76.7% decline from today's price would cut the position to $142,165, a loss of $467,985, which is 4.3 times the entire tax bill in Option A. The dividend pays $2,100 a year, a 0.34% yield, so the shares pay almost nothing to wait. Nothing here predicts where Meta goes.
For Tom, Option B is the call. It keeps the tax at 15.3% of the gain against 18.9% while cutting exposure every year. The condition that flips it: if the Reillys could watch a $467,985 loss without changing their lives, Option C is cheaper and they should hold.
Run the numbers on your own shares
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Gain: your shares times today's price, minus what you paid. Tom: $610,150 minus his $38,232 cost, $571,918.
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Concentration: position value divided by total savings. Tom: $610,150 / $2,400,000 = 25.4%.
Where this is weak
Option B assumes the price stays at $610.15 for five years. The children's 15% rate is an assumption; a high-earning child could owe 20% plus the 3.8% surtax, and a low-earning one could owe 0%, which shrinks the $85,788 gap. State income tax on a sale, any state estate tax, and Medicare premium surcharges set off by a large sale are left out. The $15,000,000 exclusion, the capital gains brackets and the senior deduction (2025 to 2028) are set by Congress and can change. The ranking does not fit you if your shares sit in an IRA, your estate is near $15,000,000, you need the money before death, or charity matters more to you than heirs.
The bottom line
For a couple with $2,400,000 and a $571,918 gain in a taxable account, holding until death is the cheapest exit, and a gift to the kids now hands them an $85,788 tax bill that waiting would erase. The deciding number is the $467,985 a repeat of the 2021 to 2022 drop would take from this position, which is why trimming 200 shares a year makes more sense for the Reillys than holding every share. If you can accept a loss that size without changing your plans, holding to death keeps the full value in the family, free of capital gains tax.
Learn 7 Ways To Generate Income With A $1,000,000+ Portfolio
If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
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