Managing Director The Capital ESOP Group, UBS Financial Services, Inc Washington, DC
This panel 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. This session will include a high-level overview of what a 1042 rollover is and the opportunities that it provides to business owners who choose to elect it. This includes its qualifications, requirements, and common investment strategies, with deeper dives into the details of each section. The session will conclude with the presentation and interactive analysis of several relevant case studies. NCEO Publication: Selling to an ESOP and Financing the Deal
Learning Objectives:
Understand the typical ESOP structure and what qualifications must be met in order to elect IRC Section 1042: Percentage of ESOP ownership – Stock type and origin –Holding period – Reinvestment window and requirements – Tax filings.
Learn what qualified replacement property (QRP) entails: Eligible vs. non-eligible QRP – Disposition of QRP – What triggers capital gains tax and what doesn't.
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.
