What is a Section 86 Rollover?

A section 86 rollover is a formal election of a specific kind of tax treatment on the disposition of a capital asset in exchange for another. It is designed to allow for the deferral of what would otherwise be an immediate tax liability arising from a legal transaction.

A section 86 rollover is a common tax treatment election arising out of corporate reorganizations and estate freezers, which are designed to freeze the value of a company at a point in time by exchanging all shares of a class for another at a specific redemption and retraction price.

Modern entity management software is designed to simplify the process to reflect, document and file with the government the election of a section 85 rollover.