QSBS Related Tax Code Sections

QSBS Court Ruling: Owen v. Commissioner of Internal Revenue-Why is an “active business” requirement under (§1202(e)) important when applying a §1045?

United States Tax Court, Nos. 930–07, 1384–07, 13303–07, 29011–08, 29090–08, January 19, 2012 KEY QSBS TAKEAWAY(S): In Owen v. Commissioner, the taxpayer met the 60–day requirement of section 1045(a)(1) because the stock purchase agreement transaction was signed on June 17, 2002, and the sold Family First Companies shares--amounting to … Read More

QSBS Court Ruling: Natkunanathan v. Commissioner of Internal Revenue- Can acquired stock options during a merger and acquisition qualify for QSBS?

United States Tax Court, No. 17291–07, February 1, 2010 KEY QSBS TAKEAWAY(S): In Natkunanathan v. Commissioner, the taxpayer misused the definition under §1202(f) and argued stock options are equivalent to the sale or exchange of stock. Another key takeaway is the taxpayers failure to provide evidence that the … Read More

Section 368

(a) Reorganization (1) In general For purposes of parts I and II and this part, the term “reorganization” means— (A) a statutory merger or consolidation; (B) the acquisition by one corporation, in exchange solely for all or a part of its voting stock (or in exchange solely for all or a … Read More

Section 351

(a) General rule No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in section 368(c)) of the corporation. (b) … Read More

Section 1045 Application To Partnerships

§ 1.1045-1 Application to partnerships. (a) Overview of section.  A partnership that holds qualified small business stock (QSB stock) (as defined in paragraph (g)(1) of this section) for more than 6 months, sells such QSB stock, and purchases replacement QSB stock (as defined in paragraph (g)(2) of this section) may elect to apply section 1045. An eligible partner (as defined in paragraph (g)(3) of this section) of a partnership that sells QSB stock, may elect to apply section 1045 … Read More