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Level 2
posted Apr 13, 2021 5:51:02 PM

351(a) exchange

I held units in a holding company LLC for over a year.  The company formed a new holding company and I did an equal value exchange of units from the old LLC to the new LLC.  Does my holding period for capital gains consideration still go back to when I originally acquired the shares?  If the new LLC has a sale in less than one year, will I still get long term capital gains treatment on any value above the exchange value?

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1 Replies
Level 15
Apr 13, 2021 6:38:10 PM

The holding period for the interest received should be the same as for that transferred. BUT note that LLCs can't participate in tax-free re-orgs so I don't know what's going on unless there was an election made.