Complexity Surrounding the $50M Gross Asset Test
At first glance, it might seem like the $50M Gross Asset Test is simple, but the reality is that in certain circumstances, it can be much more complex. For example, if a financing round has multiple closings, part of the stock … Read More
Many companies are asked to represent that their stock qualifies as QSBS before the stock is issued. If so, there may be a clause in your “Stock Purchase Agreement” or related purchase documents where the corporation stated that:
“aggregate gross assets, as defined by Section 1202(d)(2) of the … Read More
Business valuations are conducted on fair market value (FMV) basis, which means “the price at which property would change hands between a willing buyer and a willing seller, neither acting under compulsion to buy or to sell, both being able and willing to trade, both being well-informed … Read More
Aggregate gross assets include:
CashAggregate adjusted basis of other property held by the corporation.
QSBS considers the tax basis of assets, which are generally reported on Schedule L of a corporation’s tax return (i.e. Form 1120). The value of assets would include intangible assets such as goodwill.
Basis is … Read More
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 million at all times between August 10, 1993 (enactment of the Revenue Reconciliation Act of 1993) … Read More