While certain stakeholders in Qualified Small Businesses could be affected by the proposed Build Back Better Act, shareholders who hold Section 1202 QSB Stock and earn less than $400K in adjusted gross income have little to fear. The markups released today by committees of jurisdiction within the House of Representatives have included that taxpayers earning more than the aforementioned $400K will only be eligible for an exclusion up to 50% of their capital gain on the sale of qualified stock.
Previously, the percentage a taxpayer could exclude depended solely on the date of issuance of the stock and were as such:
- 50% exclusion if the QSBS was acquired after August 10, 1993, but before February 17, 2009
- 75% exclusion if acquired after February 17, 2009, but before September 27, 2010
- 100% exclusion if acquired after September 27, 2010
Our current understanding is that the previously allowed exemption levels will hold true for shareholders under the annual income threshold and the 100% exemption will remain safe.
CapGains Inc. is following this legislation closely and is forming a coalition to stay abreast of developments – keep up to date here.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.