Category: 351 Exchange

Everything about a IRS Code 351 Tax Free Exchange. Under Code Section 351(a), there is no recognized gain or loss if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in “control” (as defined in Section 368(c)) of the corporation. For example, individual SMA investors will contribute securities to a newly formed ETF in exchange for shares of the ETF.

The “Look-Through” Rule: A Closer Look at ETF Diversification in 351 Exchanges

look through rule of etfs diversification in 351 exchange

Section 351 of the Internal Revenue Code offers a powerful tax-deferral tool for investors seeking to diversify their portfolios without triggering immediate capital gains. This provision allows individuals to contribute appreciated assets to a corporation, often an Exchange-Traded Fund (ETF), in exchange for shares, deferring taxes on those gains. However, this tax-free exchange is contingent […]

A Tax Loophole for the Elite: How the Wealthy Can Avoid Capital Gains Indefinitely

business and investing how the rich avoid capital gains

The US tax code, with its myriad rules and regulations, can seem like a labyrinth designed to confound the average taxpayer and full of tax loopholes. However, hidden within its complex structure lies a powerful tool that allows the rich and connected to avoid capital gains taxes indefinitely: the Section 351 conversion. Section 351 of […]

Insurance Against Tax Claims From IRS for 351 Conversion

Shielding Against 351 Conversion Risks with Tax Liability Insurance Navigating the world of taxes can be like walking through a minefield, especially when dealing with complex transactions like converting a separately managed account (SMA) into an exchange-traded fund (ETF) under the U.S. tax code’s Section 351. The stakes are high, and the potential tax consequences […]