Startups need capital, therefore, startups need investors. As a result, startups (and their founders) absolutely LOVE qualified small business stock. Compared to an investment in an index fund or a publicly traded company, an investment in a small business has the potential to generate a return with much lower taxes.
At QSBSExpert, we talk to company founders on a daily basis, and we’re hearing a lot of worry about Build Back Better. And yes, Build Back Better (if it passes) will reduce the impact of QSBS for SOME investors. Taxpayers who earn more than $400K in gross adjusted income will only be eligible to exclude 50% of their capital gain on the sale of qualified stock. Meanwhile, taxpayers who earn less than $400K will likely not see an impact to QSBS.
Even with these proposed changes, QSBS remains a very attractive reason to invest in small companies.
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.