A recent U.S. Court of Federal Claims decision, Ju v. United States, has highlighted the importance of meticulous recordkeeping for taxpayers seeking to exclude capital gains from the sale of qualified small business stock (QSB) under Section 1202. Section 1202 offers a significant tax exclusion to incentivize innovation: … Read More
A recent IRS Private Letter Ruling found that a company providing interim staffing and executive search services was engaged in a qualified trade or business and, therefore, eligible for IRC Section 1202 gain exclusion. The ruling, PLR 202352009, stated that the Company, a C corporation that provided … Read More
On December 29, 2023, the IRS released a Private Letter Ruling (IRS Private Letter Ruling 202352009), addressing whether a corporation that provides interim staffing and executive search services meets the Section 1202 / QSBS criteria of being a “Qualified Trade or Business.” Company Background The company in question specializes … Read More
The provisions of Qualified Small Business Stock (QSBS) found under IRC Section 1202 are inarguably complicated to navigate. There are several aspects to consider when it comes to gifting QSBS. The stock donor and beneficiary will want to ensure that the QSBS gifting specifications are followed with … Read More
Rauenhorst v. Comm'r, 119 T.C. 157 (2002). Key QSBS Takeaways: A Taxpayer will most likely not be liable for Assignment of Income Doctrine if they transferred the stock in mere anticipation or acknowledgement of a redemption, merger, or the like. It is on the IRS to prove that … Read More
IRS’s Different Guidance Forms There are different forms of communication the Chief Counsel can use in order to relay tax guidance to individuals. These forms of communication, which can be interpreted in a highest to lowest authoritative level, can be: RegulationsIssued by the Internal Revenue Service (IRS) and Treasury … Read More
The vagueness of the “Qualified Trade or Business” exceptions listed in Section 1202(e)(3) have troubled “would be” QSBS shareholders and their advisors since the QSBS regulations were first introduced. Additional guidance has mostly come in the way of Private Letter Rulings, the latest of which (PLR 202114002) … Read More
United States Tax Court, No. 2917-63, July 23, 1965 Key QSBS Takeaways: In Bardahl Mfg. Corp. v. Commissioner, the United States Tax Court contended that Bardahl Corporation avoided "the imposition of individual income tax on its shareholders, by permitting its earnings and profits to accumulate instead of being … Read More
On June 25, 2021, the IRS released Private Letter Ruling (PLR 202125004), addressing whether a company that would "evaluate, measure, design, fabricate, manufacture, adjust, fit, and service" prescriptions for a third-party healthcare provider is not considered to be engaged in a business involving the performance of services … 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