Qualifying QSBS investments are not hard to find but they can be hard to maintain. A few key caveats to consider when navigating your investment tax planning for follow on investments is (i) the QSBS asset test, (ii) the timeline, and (iii) the tax exclusion. The QSBS … Read More
Navigating the tax code is tricky with just one Section but adding a second is a whole other ball game. The good news is that there is nothing that changes when reporting a traditional Section 1202 gain as opposed to a Section 1202 gain from a Section … 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
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform The combination of tax and timing can create a moving target when trying to pin down when to exercise stock options. The tax effects of exercising stock options are also dependent … Read More
Any compensation given to employees is treated as wages; therefore, FICA (Social Security and Medicare), FUTA (Federal Unemployment), and SUTA (State Unemployment) will be paid, unless the stock is received in the form of Incentive Stock Options. There is one nuance between cash and stock wages, which … Read More
Employees can be compensated with QSBS and elect the Section 1202 capital gains tax exclusion. There are various scenarios where this can happen. One is a startup company that is tight on cash, but because the company is high-growth and disrupting its target market the stock has … 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
Just because the Internal Revenue Service (IRS) does not require the taxpayer to provide any documentation when electing the Section 1202 capital gains tax exclusion on the sale of QSBS, does not mean that you don't want to have your documentation in order. Prior to the … Read More
Under Section 1202 a qualified small business must be an operating company that is structured as a C Corporation. Even if the company was founded under a different legal structure the company can be restructured as a C Corporation and issue QSBS with the five-year timeline starting … 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