1042 QRP

1042 QRP: How To Finance A Seller Note

Employee Stock Ownership Plans (“ESOP”) create unique opportunities for business owners and their employee-participants to build wealth through their companies. To foster broader adoption of ESOPs, Congress instituted a number of attractive tax advantages benefitting ESOP companies and the business owners who form them. Among these is the opportunity for sellers to defer capital gains taxes on the sale of their stock through a 1042 exchange – potentially forever. To do so, a seller rolls the proceeds from the stock sale into Qualified Replacement Property (QRP).

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