What Types of Businesses Qualify as Qualified Small Businesses (QSBs)?
Qualified Small Business Stock (QSBS) is and the associated benefits are subject to more than a few restrictions and conditions. One of those being the actual trade of the business issuing the stock. Rather than clearly outlining the … Read More
On September 02, 2016, the IRS released Private Letter Ruling (PLR 201636003), addressing whether, after several name changes to the company and a conversion from a LLC to a C-corporation, does the reorganization under § 1202(h) and § 368 have any effect on the stock—having no formal … Read More
Tax Court of New Jersey, No. 020999-2010, October 9, 2012
KEY QSBS TAKEAWAY(S): In Aciu v. Director, the taxpayer failed to prove that the language in N.J.S.A. 54A:5–1(c) followed the federal tax exemption on the sale of capital gains under I.R.C. § 1202. Also, the taxpayer failed to … Read More
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
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
United States Tax Court, No. 3769-10, August 30, 2012
KEY QSBS TAKEAWAY(S): In Holmes v Commissioner, the taxpayer provided no evidence to demonstrate that they received the shares at original issuance (required as per IRC §1202(c)(1)(B)), and therefore failed to substantiate that their stock holdings qualified as QSBS. … Read More
§ 1244. Losses on small business stock
In the case of an individual, a loss on section 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset … Read More
(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
(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
§ 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