Investing in the 1042 Rollover

This session will help attendees understand the significant requirements that a business owner must fulfill before being able to take advantage of the tax deferral options offered by IRC Section 1042. We will review how an owner of a privately held business can sell a part or all of his or her business to an ESOP and consequently defer the recognition of long-term capital gains taxes from the sale.

Learning Objective 1: Understand the typical ESOP structure and what qualifications must be met in order to elect IRC Section 1042, including but not limited to:
Percentage of ESOP ownership
Stock type and origin
Holding period
Reinvestment window and requirements
Tax filings

Learning Objective 2: Learn what Qualified Replacement Property entails:
Eligible vs. non-eligible QRP
Disposition of QRP
What triggers capital gains tax and what doesn't

Learning Objective 3: Common diversification strategies such as:
Passive strategy
Active/flexible strategy
Blended strategy
As well as the resulting portfolios and advantages and disadvantages of each strategy