one other consideration on trying to do multiple 351 exchanges:


Risks with Sequential SeedingExecuting multiple exchanges to steadily get rid of a concentrated position is possible but risky, and is known as "sequential seeding". For example:An investor contributes just enough of a concentrated holding to a 351 exchange to pass the diversification tests.They then use the remainder of that concentrated holding alongside the newly seeded ETF to perform another 351 exchange, and so on.The IRS may look closely at this to make sure you aren't running afoul of the "substance over form" doctrine. If the IRS enforcement decides the sequence was structured purely to execute an end-around on the diversification rules, they could collapse the separate steps and treat them as one large, taxable event. To mitigate this risk, you must ensure you have valid economic reasons and strictly follow the spirit of the laws"

Berkshire Hathaway FAQ

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