A long-standing provision of the tax code that lets concentrated holdings be contributed into a diversified fund structure without triggering an immediate gain.
Investors holding a large, low-basis position face a familiar bind: diversifying means realising the gain, and holding means carrying the risk.
A 351 exchange offers a third path. Contributing qualifying securities into a fund structure in exchange for shares can defer the gain while the underlying exposure becomes diversified.
The mechanics are specific and the eligibility rules are strict, so this is a strategy to evaluate with a CPA before a position ever reaches the point of forced sale.