Brent Sullivan

Sunday is supposed to be my day off...

Soon after SpaceX announced it would go public, a former company engineer, who wishes to remain anonymous, reached out to me on social media. He was looking at an 8-figure outcome, and wanted to chat about modeling various divestment strategies. Part of his decision was considering whether or not to work with a financial adviser. I asked him if I could record his thought process. This episode is our discussion. Get The Albatross wherever you get podcasts.

Note from Senator Wyden commenting on IRS Notice 2026-62 is worth reading. He refers to my reporting on the Wall Street Tax Association seminar in July 2026 a couple of times, and indirectly to my analytics. He suggests straddle treatment, which I think would be a novel interpretation. Net impact would be loss deferral, rather than acceleration. But... This would require understanding Treasury's authority, possibly new regs, and challenges from industry. If regulation is unfruitful, then an act of Congress may be the only path. Extremely early days on this. My interpretation could change. Work with counsel if this is relevant for your circumstances.

New episode of The Albatross with Simone Devenny, JD on charitable remainder unitrusts (CRUTs) for divesting concentrated stock positions. A CRUT is a split-interest vehicle because a charity gets something and the beneficiaries get something. Put the stock in, get a deduction and a worst first income stream out. Charity gets the balance after the payments. No tax on contribution, but it's irrevocable. Don't want/need the income? Defer it using a NIMCRUT. Or pair the income with a loss-harvesting strategy for more deferral. Many options. Get The Albatross wherever you get podcasts.

Rumor: a couple of managers have taken up residence in OpenAI's physical office space and are allowing employees to direct deposit to a long/short separate accounts. Can anyone corroborate?

Transferable tax credits can offset passive income. Why aren't people buying them? Maybe they should? I spoke with Jason Prince at Giraffe Financial, a tax compliance and credit transfer facilitator. He says the "tax equity" world used to be like $20 billion in credits joint-ventured between giant corporations per year, then the Inflation Reduction Act made many of the credits properly transferrable. OBBBA didn't kill the credits (well for EVs it kinda did), so now it's something like $60 billion/year with smaller companies and individuals getting involved. Link in profile for my latest blog.

Wondering whatever happened to the person harvesting a bunch of Bitcoin tax losses who got an Info Doc Request from IRS regarding Section 7701(o). @olsonplanner did that ever play out? Super interesting case study.

I'm making some progress in my autocallable ETF journey... starting with just 1 isolated contract and building from there.

My full comment on IRS Notice 2026-62 focusing on Section 351 transfers to ETFs. For several years, ETF sponsors have accepted appreciated securities in-kind into new(ish) ETFs. Some quickly reshape their portfolios using the magic of the ETF wrapper, and some rebalance over time like ordinary ETFs. We can measure the difference using cohort benchmarking. Full comment: taxalphainsider.com/tax-alph…

ETFs seeded via section 351 transfer tend to divest their launch-day holdings faster and further than ordinary ETFs launched around the same time. I grouped US equity ETF launches from 2023Q1 to 2025Q2 by quarter and seed mechanism (351, 368 reorganization, ordinary), dropped bond, credit and derivative funds, and looked through to constituents where a fund holds other funds. "Faster and further" divesting could be part of a "plan" mentioned in Rev. Rul. 2026-20, or it could have something to do with the ETF's strategy. Some active strategies (e.g., momentum) simply trade more. My comments to Treasury on Notice 2026-62 recommend a cohort benchmark approach rather than fixed bright line testing, to control for time-varying markets and typical portfolio management. Full comments in my latest blog. (Link in profile)

$530 billion AUM in ETFs holding derivatives... covered calls buffers autocallables tail hedging box spreads managed futures return stacking ...and more! Each of these is hyper technical and interesting...

Need your advice. There is a man who is adamant about a large financial injustice in the investing world near and dear to my heart and is very loud and certain about it on socials and now the the court system. I am curious about said injustice, but said man appears volatile and monomaniacal. And I'm afraid that if I investigate said injustice that said man will fucking lose his mind since this is his calling. I've actually already looked into it and my initial conclusion is that he's wrong for sorta trivial reasons. And thus my investigation would become more about said man than the thing said man is griping about, which is sort of nothing. And I'm not sure I've entered my Nathan Fielder phase yet where I can examine the human condition so intimately, but I think that's where this whole thing would lead. Should I investigate the thing? Should I investigate the man? Should I ignore this entirely? Advice?

Next episode of The Albatross with NYU Prof. @DanielJHemel is about trader funds. In 1988, Treasury issued a temporary regulation that persists to this day. It allowed trader fund investors to escape the passive activity rules that would normally require hundreds of hours of material participation for any losses to offset nonpassive income. Prof. Hemel thinks Treasury should rescind the temporary 1988 regulation, making trader fund investors passive investors. Get The Albatross wherever you get podcasts.

The ETF turf wars have entered the §351 era... A new Avantis ETF launched recently, seeded by stocks and other ETFs... after some struggle. Before launch, a few advisers told me Avantis was rejecting certain clients or their ETF seed assets, making many advisers feel like this was a tax compliance thing. But... several competing ETF sponsors refused to sign the typical fund-of-funds agreement that would have allowed Avantis to accept their ETFs. Read more: taxalphainsider.com/turf-war…

No one: Me: Here are 4 balance sheets showing how tax-loss harvesting a short position works. Short losses and gains are always short-term, btw. Balance sheets are an extremely effective tool for understanding the mechanics of margin and shorting, and could be extended to tax liability, though I don't show that here.

In July 2026, SEC fined Simplify Asset Management $400,000. Someone flagged it to me because it had a whiff of a §351 transfer, so I looked into it. The order covers several things. The §351-adjacent one is about how the Simplify Propel Opportunities ETF (SURI) was seeded. Here's what happened: • A trust owning about 25% of Simplify seeded SURI in kind in 2023: ~$109M in vs. ~$90M basis (via §351) • That voting stake made the trust an affiliate of SURI's adviser. Under the '40 Act, an adviser's affiliate can't sell property to the fund without an SEC exemption, and nobody applied for one. • The exemption is the SEC's check that an insider's deal with a fund is fair. Weirdly, Simplify told the fund's board the trust wasn't an affiliate. • A trustee of that trust was also a portfolio manager at SURI's sub-adviser and a named PM of SURI, managing the assets that came in. It was all sorta entangled and I'm just wondering who was harmed and who cares, but that's pretty much what happened. @AdviserCounsel might have more nuanced thoughts on this. Relatedly, but not about the SEC fine, Bloomberg's @justinaknope and @zachmider and others covered SURI in its July piece on §351 ETF seedings.

When serious people try to publish analysis and research on social media and this is literally what they're up against.

I spoke with @DanielJHemel about box spread ETFs, why Treasury might consider them conversion transactions under IRC §1258, and how that might require investors (not the fund) to recharacterize capital gains as ordinary income upon disposition (assuming any challenges from industry fail). Link in profile for the write-up. The latest episode of The Albatross podcast is on the same topic. Get it wherever you get podcasts.

Autocallables... should I take a look?

Who needs crosswords when you have... The Weekend Wash Sale Puzzle™️? [not a real trademark] This weekend: harvest a short position, then buy some more? As a bonus, if you're wondering how tax-loss harvesting a short position works (but were too afraid to ask!), this puzzle will get you up to speed. Link in profile for the puzzle. More about The Weekend Wash Sale Puzzle... I have a handful of wash sale scenarios that are interesting little mind-benders. They range from "easy" to "hard" to... "unsettled." If you enjoy feeling unsettled, then kick back, open IRS Pub. 550, and tell me if the scenario is a wash sale. Don't worry, you're indemnified. Just have fun with this little mind bender. Next weekend, I'll work through the answer... Latest blog/puzzle: link in profile.

.@teddyfuse I'm curious if y'all get an uptick in interest in transferring BTC to an ETP whenever there's a security thing like what's happening with Ledger right now. "compromised hardware wallets" etc. TradFi has security issues, too, but just wondering if news like that makes it top of mind.