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351-Exchange ETFs - A New Trend in Customized ETFs

yogibearbullyogibearbull
edited January 8 in Fund Discussions
If you have large gains in a highflying stock & want to sell it to buy a related etf for diversification, there is one obstacle.

The IRS will want its cut from your large capital gains.

Except when you do a 351-exchange from SMA or advisory portfolio into a 351-exchange etf without any tax consequences. But there are rules & restrictions.

Diversification test for contributed portfolio - single stock holdings < 25%; top 5 holdings < 50%
Accreditation requirements depend on brokerages
80% Control post-launch by the launch-investors
Tax-free Seeding happens only at inception; no continuing in-kind tax-free contributions

https://ybbpersonalfinance.proboards.com/thread/762/351-exchange-etfs

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