Key Takeaways:
- Direct indexing enables you to strategically sell shares at a loss (tax-loss harvesting) so you can offset the tax on the gain in your Anthropic shares. When one of your investments drops, you can sell it to lock in a loss, which erases the tax you’d owe on an equal amount of Anthropic gains.
- A “long/short” plan creates those losses faster for you. This is a more aggressive version of the above idea. It can incur losses whether the market rises or falls, so you build them up more quickly.
- You can diversify immediately but you need to be willing to make tradeoffs. An exchange fund gets you out of Anthropic immediately but you need to be able to hold the fund for a while; a charitable trust does it too, but you move assets to the trust.
If you’re an Anthropic employee with equity in the company, your shares have likely grown into a big chunk of your net worth. Congratulations! However, selling those shares to diversify can come with a serious tax bill. And the longer you’ve held onto the stock, the bigger the gains you’re sitting on.
The simplest, cleanest option is usually just to sell some Anthropic shares, pay the taxes, and use the proceeds to achieve your financial goals and build a diversified portfolio. However, there are some strategies I help my clients with for when they want to diversify and not immediately trigger a huge tax bill.
Please Note: Before you start thinking about taxes, make sure you’re clear on what you actually hold. Depending on when you joined, your Anthropic equity might be restricted stock units, incentive stock options, non-qualified options, or a mix, and your cost basis and holding period drive the tax on any sale.1 ISOs carry their own exercise and holding-period rules on top of that.2 I write more about that here.
1. Use Direct Indexing to Offset Anthropic Gains With Tax Losses
The first two strategies are based on something called tax-loss harvesting. When you sell an investment for less than you paid, the IRS lets you use that loss to offset gains elsewhere, so the offsetting gain gets taxed at $0.3 The simple version: buy a stock at $100, sell it at $90, and that $10 loss can wipe out $10 of gain from your Anthropic equity.
Direct indexing takes that idea and executes it strategically. Instead of holding the S&P 500 through a single fund, you own a couple hundred of the individual stocks that track the index. Because you hold the pieces, you can sell the losers and bank the losses even in a year when the index is up, then buy something similar to stay invested.
2024 is a good example. The S&P 500 finished up about 23%, but underneath that, more than 100 of its stocks were down over 5% at some point during the year.4 A single index fund can’t touch those dips; a direct index account can harvest those losses. How much you actually get depends on the market, your basis, any prior harvesting, and the wash-sale rule.
How I’d Pair Those Losses With Your Anthropic Sales
Once you’ve built up usable losses, they fund your Anthropic sales. Say an account throws off $50,000 in losses. You go sell $50,000 of gains from your Anthropic shares, the two offset, and you owe no federal capital gains tax on those gains.
The proceeds go into a diversified portfolio, which keeps generating new losses over time. It’s a repeatable cycle rather than a one-time, get-lucky-in-a-good-year move.
2. Use Long/Short Direct Indexing to Build Losses Faster
Long/short indexing is a more aggressive version of the same idea, built to harvest even more losses. Normally you buy a stock hoping it goes up; that’s called “going long,” and you make money when it rises. “Going short” is the opposite bet: you’re betting a stock will fall, so you make money when it drops and lose money when it goes up.
Adding shorting increases your chances to collect losses. With only regular holdings, you can only grab a loss when a stock falls. Add shorts, and now you also grab losses when stocks rise, because that’s when the short bets lose. So whichever way the market moves, something in the account is producing a loss you can use against your Anthropic gains.
For a big Anthropic position, that can shorten your diversification timeline. The tradeoff is there’s more complexity and costs. It’s worth it only if the tax benefit clearly outweighs all that.
3. Use an Exchange Fund to Diversify Without Selling
The first two strategies build losses and use them to offset your gains. An exchange fund skips the sale entirely, at least at first. You contribute your appreciated Anthropic shares into a pooled partnership, and other investors contribute their own concentrated positions, from Eli Lilly, Procter & Gamble, wherever.
In return, you get a partnership interest of equal value, so your exposure shifts overnight from just Anthropic to the whole mix the fund holds, which usually tracks a broad index like the S&P 500.
The key benefit of an exchange fund is that your Anthropic stock gets immediately diversified without triggering a big tax bill.
The contribution can qualify for nonrecognition under Section 721, so you don’t trigger tax going in.6 But the built-in gain doesn’t disappear, it rides along with you, so this defers the tax rather than erasing it.
Two trade-offs. You generally have to stay in the exchange fund for at least seven years, tied to the rules under Sections 704(c)(1)(B) and 737,78 and to qualify, these funds have to keep a meaningful share (around 20%) in illiquid assets like real estate. So you’re trading liquidity for speed: faster diversification now, in exchange for years of lockup, fees, and partnership paperwork.
4. Use a Charitable Remainder Unitrust to Diversify Without an Immediate Tax Hit
A charitable remainder unitrust (CRUT) also skips the personal taxable sale, but it changes ownership for good. You irrevocably move your Anthropic shares into the trust, which can then sell them and reinvest without owing capital gains at the trust level, because it’s tax-exempt.
The trust puts the proceeds into a diversified portfolio and pays you an income every year, typically somewhere between 5% to 8% of the trust’s value, with at least 10% reserved for charity at the end.9 You also get a partial charitable deduction up front for the piece that’s eventually headed to charity.
Similar to an exchange fund, the key benefit is that you can diversify your Anthropic stock immediately without generating a huge immediate tax bill.
The built-in gain still follows you, though. Later payments can carry out accumulated capital gain, so a CRUT lives inside your broader tax and estate plan. It makes the most sense when giving to charity is already something you want to do.
The tradeoff here is that once the shares are in the trust, they aren’t coming back to your brokerage account. Your access is the yearly payment, full stop. If you might need that same money to buy a house, cover college, fund a business, or bankroll an early retirement, a CRUT probably isn’t the right home for it.
Keep in mind: Anthropic offers equity donation matching at 1:1 for up to 25% of your equity grant, and early employees may have even more generous terms, so check what applies to you.10
How I Compare These Four Strategies With Anthropic Employees
Your lifestyle and goals can guide you to which strategy would be the best fit for your specific situation. Here are some factors I talk through with my clients when deciding which strategy to use:
- How fast you want to diversify: Direct indexing sells gradually, long/short can speed that up, and an exchange fund or CRUT shifts your exposure immediately.
- Liquidity and timing: You need to understand when you need access to your funds from your Anthropic stock. If you need or want access to your funds for a house, tuition, or another near-term goal, exchange funds and CRUTs may not be a good fit for your situation.
- The tax mechanism: The direct-index approaches create losses to offset gains, an exchange fund defers, and a CRUT moves your assets into a tax-exempt trust..
- Complexity and hassle: Long/short adds shorting and financing complexity, exchange funds adds admin, and CRUTs add legal and trustee work. These are tradeoffs for the tax benefits.
- Cost: Advisory fees, financing, fund expenses, and legal work all have costs, so the tax savings have to clear those costs to be worth it.
- What you can actually live with: For most people, mixing approaches beats forcing every Anthropic dollar into one structure, liquid sales for near-term needs, a specialized vehicle for the money that can sit longer.
Tax Strategies to Diversify Your Anthropic Equity FAQs
1. Can I use these strategies while Anthropic is still private?
Yes, you can start direct indexing and long/short to build up tax losses while Anthropic is still private. You can do the prep, mapping your grants, basis, and a target Anthropic percentage, before any IPO. But actually using exchange funds and CRUTs depends on having publicly traded, transferable shares, plus each strategy’s own eligibility rules.
2. Can tax-loss harvesting really get me to $0 in capital gains tax on part of my sale?
Yes, you pay $0 taxes on any gains offset by tax losses.
3. What’s the difference between direct indexing and long/short direct indexing?
Plain direct indexing harvests losses from long positions that track an index. Long/short adds short exposure, which creates more harvesting opportunities and typically generates losses faster than plain direct indexing.
4. Does an exchange fund erase my Anthropic tax or just delay it?
It defers the built-in gain rather than erasing it. When you eventually redeem or sell out of the fund, that gain comes back onto your return.
The trust can sell without owing capital gains right away, since it’s tax-exempt. But your yearly payments can include accumulated gain to you over time under the trust’s rules.
6. Can I combine more than one of these?
Yes, and often combining strategies is the best approach. Staged sales, harvesting, an exchange fund, and a CRUT can each handle a different slice of the position when each one solves a distinct problem.
How I Help Anthropic Employees Build a Tax-Aware Diversification Plan
Diversifying your Anthropic shares doesn’t have to mean handing a huge chunk to the IRS. Between harvesting losses, an exchange fund, and a charitable trust, there’s usually a way to bring your concentration down while keeping the tax bill in check.
I can help you decide which of these fits your goals, your timeline, and how much tax you’re willing to pay now versus later. I’ll coordinate with your CPA and attorney or refer you to one, while keeping every decision tied to what actually matters to you. If you want to map out a tax-smart plan for your own Anthropic equity, let’s chat.
Resources:
1) IRS Publication 551: Basis of Assets
2) IRS Topic No. 427: Stock Options
3) IRS Publication 550: Investment Income and Expenses
4) S&P Dow Jones Indices: U.S. Equities Market Attributes
5) SEC: 130/30 Fund Disclosure
9) IRS: Charitable Remainder Trusts
After almost 20 years working in tech for companies including eBay, Yahoo!, Intuit, and startups, I made a career change into the financial world as a fee-only financial planner more than a decade ago. I earned my CFP®, spent a few years at a boutique fee-only firm in San Jose, worked 2 1/2 years at a leading wealth management firm in San Francisco, and then left to build the firm I wish had existed when I was working as a tech professional.
My mission is to help other Silicon Valley tech professionals make the most of their stock options and RSUs to help them reach their financial goals.
