Section 351 Explained: The Tax Loophole That Converts Stocks to ETFs Tax-Free

Описание: Section 351 Explained: The Tax Loophole That Converts Stocks to ETFs Tax-Freehat if you could swap a concentrated stock portfolio for a diversified ETF and pay zero capital gains taxes the day you do it? That's exactly what Section 351 of the U.S. tax code lets you do.

In this video, I break down how Section 351 ETF conversions actually work, the strict IRS rules you have to follow, and which Wall Street firms are using this tax-deferral strategy to launch billion-dollar ETFs.

Here's what you'll learn:
How a Section 351 exchange defers capital gains taxes
The two strict IRS rules: 25% single-stock cap and 80% control rule
Why only newly formed ETFs can do this (not existing ones)
Real launches: Stance, Cambria Tax Aware, Longview Advantage, and the upcoming Cambria Global Equal Weight 2 (June 2026)
The catch: cost basis carries over, so taxes are deferred, not eliminated

Key stats:
Single Stock Cap: 25%
Top 5 Holdings Cap: 50%
Control Rule: 80%
ETFs Launched 2021-2025: 39
Total Seed Assets: ~$8.7B
Tax Treatment: Deferred (not eliminated)

Comment below: which concentrated stock would you diversify out of if you could do it tax-free?

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DISCLAIMER: This video is for educational purposes only and is not investment advice. Section 351 exchanges have minimum investment requirements (often $100K or more) and complex tax implications — talk to a qualified tax advisor before participating.

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