Tax Planning for Sellers in ESOP Transactions Absent a 1042 Election

Thursday, April 17, 2025

9:45 AM – 10:45 AM MST

Location: 258

CE: 1

CE Type: CPE, SHRM
Education Level: For All levels

Nate Dykes, n/a

Vice President & Partner
Paralign Capital Partners, LLC
Vancouver, WA
Colin Boddicker, n/a

Senior Vice President, Financial Advisor
The O'Daniel Group at Morgan Stanley Private Wealth Management
Dallas, TX

This presentation will offer real-life tax planning solutions and examples for sellers to consider when structuring their ESOP transaction, to maximize their personal tax outcomes while limiting pressure upon the company and maximizing the flexibility and potential upside for the ESOP and employees. Strategic tax planning can be put in motion years before the actual ESOP transaction, and we think certain tax strategies should be considered by all sellers, depending on their personal objectives, as they look to solve for a specific outcome. Now more than ever, tax planning is playing a big role in how sellers structure an ESOP transaction, especially sellers not intending to defer all of the gain otherwise recognized via a §1042 election.
NCEO Article: A Second Option: Tax-Free Proceeds for the Stock Sale to the ESOP

Learning Objectives:

Comprehend the pros and cons of various tax planning strategies to consider when solving for seller's personal financial planning objectives.
Understand the available tax strategies for sellers, including tax-loss harvesting strategies through an external investment portfolio, especially when utilizing a full or partial installment sale for their ESOP transaction.
Discover how to reduce the tax burden of the seller, while preserving capital and flexibility for the company and by extension the ESOP, by replacing corporate capital expenditures as capital investments made personally by the seller.