An investor can make a follow-on investment in a section 1202 C Corporation, but the second investment will have a new timeline, which starts on the day of the issuance of the QSB stock. Also, the second investment will still have to follow the same guidelines … Read More
The aggregate gain from sales of QSBS eligible stock issued by any corporation is subject to limits specified in IRC Section 1202(b). Each year that a shareholder sells QSBS, the total gain that may be taken into account for each issuing corporation is limited to the greater of: $10 million … Read More
In order to qualify as a “Qualified Small Business”, Section 1202 requires that the corporation to be in a “qualified trade or business.” The general intent of the QSBS tax exclusion is to incentivize investment in entrepreneurship of innovative companies to help drive future economic growth. Example of … Read More
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform In order to qualify as a “Qualified Small Business”, Section 1202 requires the stock to meet the “Gross Asset” test, whereby the “aggregate gross assets” of the corporation: Did not exceed $50 … Read More
A tax-free stock transaction happens when stock is transferred or exchanged without realizing any gains on the stock. A few examples of tax-free transactions that maintain QSBS status are (i) gifted stock, (ii) stock inherited after a death, whether through an estate or other means, (iii) from … Read More
An investor who meets the requirements of an "accredited investor" under Rule 501 of Regulation D by the Securities and Exchange Commission (SEC) is legally allowed to invest in venture capital funds, hedge funds, debt securities, or private equity. On August 26, 2020, there were amendments to … Read More
§230.501 Definitions and terms used in Regulation D. As used in Regulation D (§230.500 et seq. of this chapter), the following terms shall have the meaning indicated: (a) Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of … Read More
Updated Code Section 1202 107 STAT. 422 PUBLIC LAW 103-66-AUG. 10, 1993 (c) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 1993. Subpart B-Capital Gain Provisions SEC. 13113. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL BUSINESS STOCK. (Before February 17, 2009) 75-PERCENT EXCLUSION FOR … Read More
As noted in this article, the QSBS tax exclusion has increased several times since first implemented in 1993. Therefore, “when” QSBS was acquired impacts the magnitude of the potential tax exclusion. Additionally, “how” the QSBS was acquired impacts whether or not the stock is eligible for QSBS … Read More
The stock has to be held for more than 5 years in order to qualify as “eligible gains” for QSBS purposes. (as per Section 1202(b)(2)). Although this is true it is possible to maintain your timeline if the stock is sold early using Section 1045. There … Read More