A recent Tax Notes piece by Manoj Viswanathan of the University of California College of the Law, San Francisco argues that the current system for claiming the Qualified Small Business Stock exclusion places too much responsibility on the wrong party. Rather than requiring shareholders to prove Section … Read More
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform Simple Agreements for Future Equity, otherwise known as SAFEs, exist thanks to the startup accelerator Y-Combinator’s 2013 innovation. With a SAFE, an investor makes a cash investment in a company, but the … Read More
What is a family limited partnership? A family limited partnership, or "FLP", is a legal entity established when two or more members of a family create a partnership. The partnership is set up as a holding company, and the holdings may include business interests, real estate, securities, and … Read More
Can I ask the IRS if my company qualifies as a Qualified Small Business? Taxpayers can seek guidance from the IRS to determine whether their company or a company in which they are a shareholder meets the definition of a Qualified Small Business (QSB). This would involve requesting … Read More
If there was a simple “yes or no” equation for this question, this would be a very short article. The reality is more complex, since individual circumstances will impact how companies handle QSBS-related requests. Because both the company and the individual shares held need to qualify, this … Read More
YESSSS it is possible to make a "tax-free investment" without needing to qualify as a 501(c)(3) nonprofit, government entity, or investing in municipal bonds. Navigating the tax code is like playing chess, you need to have a strategic gameplan with various scenarios mapped out to make your … Read More
"Never invest in anything that eats or needs repairing." - Billy Rose Putting Section 1202 QSBS (i.e. qualified small business stock) and convertible note ("QSBS Convertible Note") in the same sentence is a recipe for an "investment needing repaired". If you have stumbled upon this page there are … Read More
According to Section 1202, an individual must receive QSBS either directly from the issuing company or through a gift or inheritance. Partnerships or LLC are allowed to transfer QSBS to a partner but not vis versa. A partnership or LLC is not a stand-alone entity but a … Read More
If a divorce were to occur and the QSBS was divided between the two individuals it would be treated as if each individual had QSBS from the day it was issued. The divorce actually creates two separate exclusions, one for each spouse. For example, each individual would … Read More
QSBS purchased on or after September 28, 2010, is 100% excluded from capital gains taxes, net investment income taxes (NIIT), and alternative minimum taxes (AMT) as long as the QSBS gains do not exceed the exclusion cap. Gains over the exclusion cap will be subject NIIT and … Read More