{
  "id": 6792498,
  "title": "A 100-Year-Old Tax Rule Called “Section 351” Lets the Rich Turn a Stock Portfolio Into a Private ETF and Put Off the Capital Gains Bill Indefinitely",
  "url": "https://urgent.news/2026/09/10/a-100-year-old-tax-rule-called-section-351-lets-the-rich-turn-a-stock",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-10T10:48:17.000Z",
  "source": {
    "name": "Yahoo Finance",
    "slug": "yahoo-finance",
    "url": "https://finance.yahoo.com/markets/options/articles/100-old-tax-rule-called-104817778.html"
  },
  "original_language": "en",
  "account": "A 100-year-old tax rule known as Section 351 enables wealthy investors to transfer stock portfolios into private exchange-traded funds (ETFs) without incurring immediate capital gains taxes. This provision, dating back to the Revenue Act of 1921, allows taxpayers to contribute property to a corporation in exchange for that corporation's stock, with no immediate tax consequences. The Internal Revenue Service (IRS) oversees the rule, which is now marketed as a retail product for high-net-worth individuals.\n\nTo utilize Section 351, three criteria must be met: diversification, minimum investment, and control. The fund must have a diversified portfolio, with no single holding exceeding 25% of the fund and the top five holdings capped at 50%. Contributions must also amount to at least $1 million, and after the exchange, the contributors must control at least 80% of the new corporation.\n\nA retiree with $8 million in NVIDIA, Apple, and Microsoft stock, with a cost basis of roughly $600,000, can avoid paying federal capital gains taxes by contributing these shares to a newly formed ETF. The gain remains deferred, and the tax only becomes due upon the sale of the ETF shares or the death of the investor, when the heirs receive a stepped-up basis that eliminates the deferred gain entirely. This strategy is particularly advantageous for wealthier investors, as the setup costs and minimums are more easily absorbed by their sizable assets.\n\nIn addition to Section 351, other tax-saving strategies include using ETFs instead of mutual funds in taxable accounts, harvesting losses to offset gains, and taking advantage of the 0% long-term capital gains bracket for low-income retirees. By consulting with a fiduciary advisor, investors can navigate the complexities of retirement planning and make informed decisions about their financial future.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}