The Frontier of Tax-Aware Investing

Noah Schwartz, CFP®

August 31, 2026

Investment strategies designed to materially reduce taxes for eligible investors.

“Taxes are what we pay for a civilized society.”* They fund infrastructure, national defense, legal systems, and public services that make our prosperity possible. But overpaying is optional. There’s no trophy for best taxpayer.

Leading asset managers historically catered mostly to tax-exempt institutional investors like pensions and endowments. Their most sophisticated tax-aware strategies were reserved for ultra-high-net-worth taxable individuals who needing custom solutions. Now, these strategies are available to investors like our clients.

Magnolia Private Wealth keeps pace with this Frontier of Tax-Aware Investing by: identifying which strategies are truly viable, performing due diligence on investment or tax risks, and harnessing those with greatest potential to materially reduce a client’s tax burden–via thoughtful portfolio construction and ongoing management.

Conventional tax-aware tools–the ones most advisors know about–are merely table stakes. What follows sits at the Frontier–strategies that are effective individually and, in combination, produce powerful compounding tax savings.

If you’re a taxable investor, you’re almost certainly paying more taxes than you need to. Magnolia Private Wealth can help you change that—because keeping more of what’s yours is the real trophy.

Below are specific opportunities our clients use to reduce their tax liability.

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Cash Management

Pay long-term capital gains tax instead of ordinary income tax on cash-like reserves.

Transform Tax Rates

Solution

Options-Based Cash Management

Required Amount

$1+

Candidate

Any investor that holds cash.

Lending Solutions

Borrow against your investments at lower rates and deduct the interest.

Enhance Liquidity

Identify Additional Deductions

Solution

Box Spread Lending

Required Amount

$50,000+

Candidate

Investors who use/need lending solutions from their portfolio.

Portfolio Optimization

Own a better-diversified, lower-fee, tax-efficient portfolio without creating a current tax liability.

Defer Capital Gains

Solution

351 Exchanges

Required Amount

$150,000+

Candidate

Investors with fragmented or legacy stock portfolios.

Capital Gains Deferral, with Tax-Free Reinvestment

Defer capital gains from any source (property, investments, or business sales) while potentially creating tax-free growth on the reinvested proceeds.

Identify Additional Deductions

Defer Capital Gains

Eliminate Future Taxes

Solution

Qualified Opportunity Zones

Required Amount

$1,000,000+

Candidate

Investors who have current or recent large capital gains events.

Real Estate Capital Gains Deferral and Liquidity

Exchange real-estate for diversified, professionally-managed, institutional assets.

Enhance Liquidity

Defer Capital Gains

Solution

1031 Exchanges, Delaware Statutory Trusts, and 721 UPREIT Transactions

Required Amount

$100,000+

Candidate

Investors selling real estate held for investment.

Capital Loss Generation to Offset Gains

Generate and accumulate capital losses to offset either near-term or future capital gains liabilities.

Defer Capital Gains

Generate Capital Losses

Eliminate Future Taxes

Solution

Long/Short Extension Separately Managed Accounts

Required Amount

$500,000+

Candidate

Any investor who holds appreciated assets or expects a capital gains transaction.

Ordinary Income Loss Generation to Offset Gains

Generate pass-through ordinary income losses with limited partnership structures to offset ordinary income liabilities, including wages.

Transform Tax Rates

Generate Capital Losses

Offset Ordinary Income

Solution

NPC Hedge Funds

Required Amount

$1,000,000+

Candidate

Investors who would benefit from reduced ordinary income (e.g., wages). Significantly beneficial to higher tax brackets.

Ordinary Income Deductions and Tax Incentives

Create ordinary income deductions through energy and infrastructure limited partnership structures.

Identify Additional Deductions

Offset Ordinary Income

Solution

Oil & Gas Partnerships

Required Amount

$250,000+

Candidate

Investors in high income tax brackets.

^{*Oliver Wendell Holmes Jr., US Supreme Court Justice.}

These strategies may involve risks and are not suitable for all investors. Magnolia Private Wealth doesn’t provide tax or legal advice; please consult both an investment advisor and coordinate with your tax advisor.

_{Disclaimer: The opinions voiced and information provided in this document is for informational and educational purposes only. It should not be considered investment, financial, or legal advice. Nothing herein constitutes a recommendation to buy, sell, or hold any security or financial instrument. Magnolia Private Wealth does not provide tax, legal or accounting advice. Investing involves risk, including the potential loss of principal. You should consult with a qualified financial advisor, tax professional, or other appropriate professional before making any financial decisions. The author and publisher assume no liability for any losses or damages resulting from the use of this information.}

The Frontier of Tax-Aware Investing

Investment strategies designed to materially reduce taxes for eligible investors.

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