Mini Case Study: 351 Exchanges
This week, we helped one of our high-net-worth clients in Eagle, ID consolidate his portfolio of 100+ stocks into a balanced portfolio without any tax liability.
Here’s what that looked like:
Through a combination of inherited and legacy holdings, Frank’s portfolio had over 100 positions, some with massive gains and others at a loss.
Because he held so many positions, Frank did not know what he owned and instead wanted a simple, balanced portfolio of global stocks, bonds and alternatives.
First, we sold all the positions realizing a substantial loss (which can be used to offset future capital gains should funds be needed).
This still left over 50 positions with large, unrealized gains.
Using a 351 exchange (think of a 1031 exchange* but for stocks), we converted these 50 positions into one S&P 500 ETF.
Had we instead sold the positions, it would have created well over $100k in capital gains.
Frank now has a simplified balanced portfolio that he understands and feels comfortable with.
If you have an overly complex portfolio and want to simplify and diversify it, a 351 Exchange is a great option.
Send me an email (nick@swrpteam.com) or book a time on my calendar if you’re dealing with a similar situation and need a trusted Advisor that can help.
*Read our blog on 1031 exchanges here.
This material is purely intended to be general and educational in nature, and should not be construed as specifically-tailored investment, financial planning, tax, legal, or other professional advice. Information and data contained herein is as-of the date of publication, and may be subject to change in the future without notice. Any investment performance referenced is purely past performance, which is no guarantee of any future performance. Nothing contained herein should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or other financial product or investment strategy. All investment, tax, and financial planning strategies involve risk that you should be prepared to bear. You are highly encouraged to consult with professionals of your choosing before taking any action based on this material.