By Carmine Coppola, Co-Founder, Strata Capital
One of the biggest misconceptions in financial planning is that all tax strategies need to be reactive. The truth is, some of the most valuable tax moves happen well before the filing deadline. In fact, some begin years in advance.
If you are a high-income professional looking for smarter ways to manage taxes, this is a concept worth understanding. It is called tax asset harvesting, and it has been a foundational part of how we help clients at Strata Capital for over a decade.
In my recent video, I break down what tax assets actually are, how they work, and why they matter for long-term wealth preservation. You can watch the full video here:
Watch: How Tax Assets Can Reduce Your Tax Bill
Here are the core insights from that video and why this might be one of the most underutilized strategies in your portfolio.
What Are Tax Assets?
At a basic level, tax assets are financial resources that can lower your future tax liability. You can think of them like credits or offsets earned by either overpaying taxes or recognizing losses in earlier years. Instead of disappearing, these assets can be carried forward and used strategically in the future.
There are two key types: deferred tax assets and tax credits.
Each operates differently, but both serve one important function. They allow you to keep more of what you have earned without needing to wait until tax season to act.
Deferred Tax Assets: Turning Past Losses into Future Opportunity
A deferred tax asset usually comes into play when you overpay taxes or incur a loss in a particular year. That loss is not wasted. It can often be carried forward to offset future taxable income.
This might include:
- Capital losses from investments
- Operating losses from a business
- Overpayments from earlier tax filings
For example, if you realize a $50,000 capital loss in 2025, you may not be able to use it all immediately. However, you may be able to carry it forward and apply it against future capital gains or even deduct a portion against ordinary income. This gives you the ability to align losses with years when your income is highest, making the tax impact more meaningful.
If you have company stock, a concentrated portfolio, or a significant one-time income event, these assets can be used to help smooth your tax burden over time.
Tax Credits: Dollar-for-Dollar Impact
Tax credits are another form of tax asset. They work differently from deductions. While a deduction reduces the amount of income you pay tax on, a credit reduces the tax owed itself. This is often more impactful for high earners.
Examples of tax credits include:
- The Foreign Tax Credit for taxes paid internationally
- The R&D Credit for innovation and qualifying business expenses
- Credits tied to energy-efficient investments
- Various carryforward credits from prior years
The key is not just knowing these credits exist, it is knowing how and when to use them as part of a larger strategy. Credits are often overlooked, especially when tax planning is siloed and not integrated with the rest of your financial picture.
Why High-Income Earners Should Care
Most tax planning focuses on the current year. That is understandable, but it often leaves long-term opportunities untapped. At Strata Capital, we believe in forward-thinking tax strategy. We look for ways to reduce current liabilities while also creating flexibility for future tax years.
Tax asset harvesting fits that vision. It helps clients who:
- Experience income volatility due to equity grants or bonuses
- Manage legacy assets with large unrealized gains
- Own or have sold private businesses
- Are preparing for a career transition, IPO, or retirement
In each of these scenarios, there is potential to use tax assets to cushion high-income years or create optionality in low-income years.
Real-World Planning in Action
One client we worked with experienced a large capital gain after selling vested shares. Thanks to capital losses we had harvested in a prior year, we were able to offset a substantial portion of that gain. The result was a significantly lower tax bill at a time when their income was at its peak.
In another case, we carried forward a business operating loss for several years. When the client experienced a strong earnings year after launching a second venture, we used the deferred tax asset to reduce taxable income at exactly the right moment.
These results are not accidental. They require planning, tracking, and the ability to coordinate across income, investment, and tax decisions.
What Often Gets Missed
Tax assets are frequently underutilized because they are misunderstood. Many people forget to record their losses. Others do not realize that credits can carry forward. In some cases, no one is overseeing the full picture and the opportunity is missed entirely.
This is why tax strategy should be a year-round focus, not a once-a-year review.
By identifying and tracking tax assets continuously, you gain more control and avoid year-end surprises. More importantly, you begin to integrate tax planning into your broader wealth-building strategy.
It Is About Coordination, Not Complexity
Sophisticated financial planning is not about using complex tools for their own sake. It is about making sure every part of your financial life is working together.
If you are harvesting investment losses, exercising stock options, managing real estate, or deciding when to take distributions, each of those decisions has a tax impact. That means each decision is also an opportunity to create or use tax assets.
At Strata Capital, we help our clients see those intersections clearly. Tax assets are not just numbers on a spreadsheet. They are tools that, when used intentionally, can unlock real savings and support long-term goals.
Learn the Strategy Behind the Scenes
In my latest video, I walk through the exact approach we use to track and apply tax assets with our clients.
You will learn:
- How to distinguish between deferred tax assets and tax credits
- How to carry forward losses and apply them strategically
- What documentation and timing matter most
- How to align your tax strategy with your investment and income plan
Watch now: Unlock the Power of Tax Assets to Lower Your Taxes Legally!
These are strategies that most people never hear about. By understanding how tax assets work and how to use them, you gain a meaningful edge in how you build and protect wealth.