Enhanced Direct Indexing
Illustrate a concentrated-stock unwind alongside a leveraged-long direct-index account. The model shows harvested losses, explicit borrowing costs, and the resulting current tax deferral under your selected marginal-rate assumptions.
How the Illustration Works
The stock sale, tax payment, reinvestment, exposure, debt, and harvesting proxy reconcile year by year.
Sell the Concentrated Stock
A proportional share of value and basis is sold each year. The remaining position then grows at the annual return assumption you select.
Fund Net Equity
After current tax, proceeds enter the direct-index account as net equity. Borrowing supplies any gross long exposure above that equity.
Harvest and Offset
A declining loss-harvest proxy is applied once to gross exposure. Current-year and carried losses offset modeled long-term gains.
What the Model Measures
Harvest Proxy
3.5% of gross exposure in year one, declining 12% each year. This is an assumption, not a promised result.
Exposure & Debt
Gross exposure equals leverage times net equity. Debt is the gross exposure above net equity.
Current Deferral
The tax result is baseline current tax minus current tax after available modeled losses.
Explicit Carrying Cost
Borrowing costs 6% and management costs 0.30% of gross exposure in this illustration.
EDI Current Tax Deferral Simulator
Set the unwind, investment, and marginal-tax assumptions for one stylized scenario.
Configure Your Unwind
Changing an input clears the prior scenario.
Federal tax is an explicit marginal-rate scenario. Turning NIIT on assumes the filer is already above the applicable threshold, so 3.8% applies to all modeled net gain. State tax uses the shared 2026 top-rate illustration; local taxes are excluded. Washington uses its tiered tax with the latest-published 2025 $278,000 deduction held constant.
How Altar Rock Can Help
A real implementation requires security-level optimization, financing terms, transition rules, and a complete tax return.
Tax-Aware Unwind
Coordinate the pace and timing of sales with actual income, deductions, loss character, and other realized gains.
Direct Index Construction
Build and monitor a security-level portfolio subject to wash-sale, tracking-error, and concentration constraints.
Exposure & Financing
Choose an exposure target only after stress-testing debt terms, volatility, collateral, and liquidity.
Exit Planning
Evaluate future basis, liquidation tax, charitable transfers, gifts, and estate outcomes before treating deferral as value.
Explore More Calculators
Model different strategies to build a comprehensive wealth transfer plan.
This calculator is a stylized educational illustration, not a tax return, investment proposal, or promise of harvesting results. It assumes an 8% direct-index market return, 6% financing rate, 0.30% management fee on gross exposure, and a 3.5% first-year harvest proxy that declines 12% annually. It models a leveraged-long account, not a long/short overlay. Future tax from lower basis, terminal liquidation, dividends, wash sales, tracking error, collateral calls, local tax, and security-level outcomes are not modeled. Consult qualified investment and tax advisers before implementing. Altar Rock LLC is an SEC-registered investment adviser.