One of the key factors in working with low cost basis stock is the size of the position relative to the total investment portfolio.
If the position is a relatively small percent of portfolio assets then perhaps nothing has to be done. However, if an individual stock represents a larger percentage of an individual’s portfolio then additional alternatives should be evaluated.
For example, if you are charitably inclined, low cost basis stock may provide significant tax benefits. You donate the stock to a qualified charity and will receive certain tax benefits. This strategy can be particularly effective for things such as annual charitable contributions. In one transaction, you make your charitable donation, eliminate a capital gain, and receive a tax deduction. There are other types of strategies that could be discussed where the donor receives income from their charitable donation.
But, generally speaking, there is no “magic” answer that works in each situation. The solution depends on your specific facts and circumstances and should be evaluated in terms of the impact on your overall financial plan. Often times, using a combination approach — over a multi-year period may provide a reasonable, balanced solution.