Investing in the ESOP 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 Objectives

At the conclusion of this session, participants will be able to:

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

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

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