The US tax landscape could be undergoing a significant shift with the proposed "Tax Relief for American Families and Workers Act of 2024", announced by House Ways and Means Committee Chairman Jason Smith and Senate Finance Committee Chairman Ron Wyden and summarized by PwC,. This bipartisan agreement … 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 Qualified Small Business Stock (QSBS) exclusion is a coveted tax benefit that offers up to 100% tax exemption upon sale. However, entrepreneurs and investors must navigate a critical question: Is their business a "qualified trade or business" under Section 1202 of the Internal Revenue Code? Given the … Read More
On November 17, 2023, the IRS released proposed modifications to Schedule K-1 introducing fundamental changes in how partnerships and their investors report Qualified Small Business Stock (QSBS) gains. QSBS offers an up to 100% capital gain exclusion, and for partnerships who have QSBS gains, these benefits flow … Read More
You may have noticed some more blue on our state QSBS map. As of October 25, 2023, Wisconsin allows for the full QSBS exclusion! Governor Tony Evers signed Assembly Bill 406 which modified Wisconsin's conformity to Federal QSBS, retroactive to QSBS gains realized after December … Read More
According to the Internal Revenue Code Section 1202 (I.R.C. §1202), investors can benefit from a substantial tax advantage through Qualified Small Business Stock (QSBS). Under this section, a complete exemption from federal capital gains taxes on profits gained from the sale of QSBS stock held for a … Read More
In a recent article about the state of pre-seed valuation, Brett Calhoun of ScaleVC discusses the challenges of valuing pre-seed startups and how to avoid overvaluation. Calhoun notes that pre-seed startups are often overvalued because they have little to no track record and are therefore difficult to … Read More
Upon the collapse of Silicon Valley Bank, First Republic Bank and other banks during 2023, many companies moved cash which may pose risks for QSBS eligibility in various ways. Excess Cash or Other Holdings (perhaps from drawing down on lines of credit) may cause a company to fail … Read More
Qualified Small Business Stock (QSBS) provides a great incentive to fuel innovation in the US, by providing eligible shareholders with an up to 100% capital gains tax exclusion. QSBS helps to drive capital to endeavors that are “too risky” for many to fund, but such early-stage businesses … Read More
In a TaxNotes article from April 10, 2023, Nathaniel S. Pollock of SouthBank Legal examines recent litigation involving QSBS and notes that the case may be the "tip of the QSBS litigation iceberg". To date, QSBS litigation and other rulings have been limited to few cases, a handful … Read More