A Section 1202 Primer: The Qualified Small Business Stock Gain Exclusion

Description

Section 1202 provides for a 100% exclusion from federal income tax when qualified small business stock ("QSBS") held for more than five years is sold in a taxable sale, subject to a gain exclusion cap of $10 million per stockholder per issuing corporation or, if greater, 10 times the aggregate tax basis of the QSBS held by the selling stockholder. If the Section 1202 gain exclusion applies to the taxable sale of QSBS issued after September 27, 2010, there is no capital gains tax, no 3.8% net investment income tax and no alternative minimum tax. This session will cover the issuer-level and shareholder-level requirements under Section 1202, including the specific types of businesses that are excluded from qualification, and how these requirements impact the applicability of the exclusion. Attendees will learn how to effectively advise clients on structuring investments to maximize the benefits of Section 1202, including strategic planning for holding periods and the use of Section 1045 as a helpful tool. The presentation will also explore case studies.

This course is part of the 2024 Tennessee Federal Tax Conference Bundle. Purchase the conference bundle here.