For the last few years, the ETF industry has used Section 351 of the Internal Revenue Code to let investors seed new exchange traded funds with appreciated securities, mostly stocks and other ETFs, without recognizing the gains.On Monday, September 28, 2026, Treasury and the IRS threw cold water on the most egregious uses of 351 with Notice 2026-62 and Revenue Ruling 2026-20. While some folks are nervous about this, others are exuberant. In their minds, finally, Treausury has provided a little clarity around what routine usage of section 351 looks like.The key thing is knowing the difference.
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