For Founders / How structuring works
Four points where a structure works, or quietly fails.
Founders hear the phrase "stacking" and usually hear a number attached to it. The mechanism is what determines whether a structure holds up, and the number is never knowable in advance. This is a general description of the statutory framework, not advice about your situation.
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The limitation is applied per taxpayer, per issuer
Section 1202 caps the gain a taxpayer may exclude with respect to any single issuer's stock, currently the greater of $15 million or ten times basis for stock acquired after 4 July 2025. That cap attaches to the taxpayer holding the stock, not to the company and not to the family, which is the reason a separate, non-grantor taxpayer is relevant at all.
Stock acquired on or before that date sits under the earlier $10 million cap. The two regimes are set out here.
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A non-grantor trust is a separate taxpayer, if it is genuinely non-grantor
The grantor trust rules are detailed and unforgiving. Powers and interests retained by the founder, the identity and independence of the trustee, and who may benefit from the trust all bear on whether it is taxed as a separate taxpayer. How the trust is actually administered afterward bears on whether it is respected as separate at all.
Drafting a document that says "non-grantor" does not make it so. This is also where the most common and most expensive error occurs: a trust built from a general-purpose estate planning form, or a deliberately defective grantor trust chosen for other reasons, produces no additional limitation at all.
For married founders, the SLANT is the version of this problem with a spouse in it.
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The transferred stock must carry its qualification with it
The trust has to receive qualifying stock in a way that preserves its character and its holding period. How and when the transfer occurs, what the stock is worth at the time, and how the gift is reported are each part of the structure, not paperwork that follows it.
Timing matters here for a second reason. A transfer made when a sale is already fixed in substance invites the argument that the gift and the sale were one transaction, and that the gain belonged to the founder all along. The further a transfer sits from a liquidity event, the less available that argument is.
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Multiple trusts are permitted, and also policed
Nothing in the Code forbids more than one trust. But the multiple-trust anti-abuse rule reaches trusts with substantially the same grantor and substantially the same primary beneficiaries where a principal purpose of the arrangement is tax avoidance, and treats them as one.
Genuine differentiation in beneficiaries, distribution standards, timing, and day-to-day administration is what keeps separate trusts separate. Trusts identical in everything but name invite exactly that argument. Whether the rule reaches a given arrangement is contested, and the position is one that has drawn increasing official attention, which is a reason for discipline in design rather than a reason to avoid the structure.
What the mechanism does not tell you
We will not tell you what you will save, and we would be cautious about anyone who does.
The exclusion available under Section 1202 depends on facts that are not yet settled when the planning is done: whether the company qualifies at every relevant moment, whether a sale ever happens, what form it takes, what the law says on that date, and how the IRS views the structure on examination.
What we can do is explain what the statute makes available, build the structure carefully, document the reasoning, and keep it maintained so the position is defensible if it is ever questioned. The arithmetic is the easy part. The implementation is where plans fail, and most failures are small: a trust signed but never funded, a transfer papered as a sale, a trust unintentionally taxed as a grantor trust, or documents drafted from forms never designed with Section 1202 in mind.
Where this fits
Structuring sits on top of a foundation plan, never in place of one, and the first question is always whether the stock qualifies at all.
Important notice. This page is general information for educational purposes, not legal or tax advice, and it does not create an attorney-client relationship. Whether any structure described here is appropriate, or permitted, depends on facts specific to you, your company, and your state of residence, and tax law is subject to change, including with retroactive or prospective effect. No outcome, tax treatment, or result is promised or guaranteed. Prior results do not guarantee a similar outcome. Please consult us, or qualified counsel of your choosing, about your particular circumstances before acting.