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ESOP Tax Advantaged 1042 exchange

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“I have a client who is retiring from a company with an ESOP, and will be selling his shares in his company.  This could subject him to a large tax bill.  Do you have any suggestions on how he might lessen the tax hit?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. We bring Case of the Week to you to highlight the most relevant topics affecting your business.

Highlights of discussion

Conclusion

Properly executed, a 1042 Exchange with an ESOP can be a tax-advantaged way for certain shareholders to sell their stock and delay and, potentially, avoid long-term capital gains tax. Stockholders interested in such a transaction should discuss the option with their attorneys and/or tax advisors.

 

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