A detailed walkthrough of the Section 351 conversion process and how it enables tax-deferred diversification
For 45 years, real estate investors have used 1031 exchanges to defer capital gains taxes. When you sell a property, you can exchange it for another property of equal or greater value without triggering capital gains taxes. The same principle now applies to stocks through Section 351 conversions.
Instead of selling your concentrated stock position and paying capital gains taxes, you can exchange it into a diversified ETF portfolio. Your economic interest remains invested, your capital gains are deferred, and you gain the diversification you need.
We meet with you and your tax advisor to understand your situation, goals, and concerns. We review your position size, cost basis, and current portfolio allocation.
We conduct a comprehensive tax analysis to determine your potential capital gains liability and the benefits of a Section 351 conversion. We model different scenarios and diversification strategies.
We design a Section 351 conversion structure tailored to your specific situation. This includes selecting the appropriate ETF allocation, timing, and execution method.
We coordinate with your tax advisor and legal counsel to ensure proper structuring and compliance. This is a complex transaction that requires professional guidance.
We execute the conversion, transferring your concentrated stock into the diversified ETF portfolio. Your capital gains are deferred, and you now have a balanced, diversified position.
We provide ongoing portfolio management, rebalancing, and tax-loss harvesting opportunities to optimize your position over time.
Capital gains are deferred, not eliminated. You will owe taxes when you eventually sell the diversified position.
Work with a qualified tax advisor and attorney. Section 351 conversions involve complex tax rules.
Your economic interest remains in a dedicated ETF, not pooled with other investors.
We provide active management and rebalancing to optimize your portfolio over time.