Fiscal Cliff Legislation Extends Tax Incentive to Invest in Small Businesses

As a result of the recent “fiscal cliff” legislation, otherwise known as the American Taxpayer Relief Act of 2012 (2012 Tax Act), many individual investors are expecting future tax increases, either in the form of higher capital gains tax on their investment profits or higher income taxes on their salaries. The good news though is that the 2012 Tax Act extended a special tax incentive for investors who purchase stock in certain small businesses (Qualified Small Businesses as described below).

The Qualified Small Businesses tax incentive now provides that investors who have purchased stock in Qualified Small Businesses after September 27, 2010 but before January 1, 2014 are entitled to exclude 100% of their capital gains on the sale or exchange of such small business stock if such stock is held for five years or more, subject to certain limitations on the small business and the investor’s gain as discussed below.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  American Taxpayer Relief Act, C-Corporation, Capital Gains, Fiscal Cliff, Income Taxes, Net Investment Income, Qualified Small Business Stock

Published In: Business Organization Updates, General Business Updates, Finance & Banking Updates, Securities Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mintz Levin | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »