1042 TAX STRATEGIES
1042 enables you to eliminate the capital gains tax on your ESOP sale
Lazear has saved clients over $500,000,000 in capital gains
tax on the sale of their company to an ESOP.
Our proprietary strategy will save you millions in taxes while eliminating the negative aspects of every other 1042 strategy.
What you need to know about Section 1042
What is 1042?
What is 1042?
Why does Section 1042 exist?
Why does Section 1042 exist?
How do you defer capital gains tax under Section 1042?
How do you defer capital gains tax under Section 1042?
Floating Rate Notes (FRN):
A Costly QRP Financing Solution
Deferring capital gains taxes under Section 1042 requires buying Qualified Replacement Property (QRP) equal to 100% of the taxable gain. In a typical ESOP transaction, the seller receives ~25% in cash at closing, making it challenging to purchase QRP without additional financing.
To finance the purchase of QRP, banks will loan up to 90% of the FRN’s face value. Using leverage enables the purchase of FRNs equal to 100% of the taxable gain. The FRN loan will require annual interest expense on the 90% loan and will continue for the rest of the seller’s life, while requiring the seller’s personal guarantee.
Lazear's Real Estate-based 1042 Solution
Lazear’s proprietary 1042 solution enables clients to invest in highly profitable investment-grade real estate rather than FRNs that never grow in value and require significant interest expense for the rest of the seller’s life.
Connect with a 1042 tax strategist
Maximize the power of your ESOP with our proprietary 1042 tax solution, designed to eliminate capital gains and ultimately save our clients millions compared to alternative solutions.
Nationwide expertise
Our unique approach combines decades of expertise in finance, taxation and ownership transition paired with an in-depth understanding of the ESOP process to create a tailored 1042 solution.
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We love sharing the game-changing value of ESOPs and developing succession plans that align with what matters most to you.
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