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October 31, 2025
Tax Traps in Equity Rollovers to Avoid
Equity rollovers can defer taxes, but missteps—like tying vesting to employment (triggering §83 ordinary income), taking taxable “boot,” or sloppy earnout terms—can create immediate tax bills. Use the right structures (e.g., §351 for corporations, §721 for partnerships), mind reorg limits and elections (including timely §83(b)), and paper the deal precisely to preserve deferral. Bottom line: model after-tax outcomes up front and involve tax counsel to avoid surprises.
