A. It's common for many long term investors who believe in buy and hold and find themselves in a position where they have amassed a large amount of capital gain. Based on an article from Michael Kitces, there are 3 strategies one could consider to manage big capital gains -
1. Set a capital gains budget
For example, set the maximum amount of gains the investor is either willing to absorb and pay the taxes on, and/or the amount of capital gains that can be triggered and absorbed in the current capital gains tax bracket without increasing them above the next threshold. In practice, those thresholds would be from the 15% rate into the 3.8% Medicare surtax, or from the combined 18.8% rate into the 23.8% bracket once the underlying capital gains rate lifts up to 20%.
2. Staged selling
For example, by agreeing in advance to the decision to sell at certain thresholds — and securing a pre-commitment from the investor to do so — it will be easier to sell at those stages when the time comes. You’re no longer making a real-time investment decision about whether to sell or hold, you’re simply executing a pre-determined plan to sell..
3. Donate and replace
The basic idea, as the name implies, is to donate appreciated investments to a charity or, more commonly, a donor-advised fund, and then replace the investments by buying them back with outside dollars — i.e., those that would have been used for charitable giving anyway.