News & Analysis as of

Qualified Small Business Stock

Keating Muething & Klekamp PLL

QSBS Tax-Deferred Rollover

Today, many business owners are aware of qualified small business stock (“QSBS”) and the exclusion from gain on certain sales of QSBS under §1202, but it is still common to encounter business owners who are either unaware of...more

Pillsbury - Propel

Estate Planning for Founders - Part II: Planning with Qualified Small Business Stock

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This is the second of a four-part series focusing on estate planning fundamentals for founders. This article will address an important topic for owners of Qualified Small Business Stock (QSBS) as defined in Section 1202 of...more

Lippes Mathias LLP

Tax Considerations for Mergers and Acquisitions: Qualified Small Business Stock and its Tax Benefits

Lippes Mathias LLP on

For an active business in the post-Tax Cuts and Jobs Act (TCJA) world of lower corporate tax rates, buyers and shareholders considering a future exit should always consider C corporations and the availability of potential...more

DarrowEverett LLP

Maximizing QSBS Benefits with Estate Planning: The Art of Stacking

DarrowEverett LLP on

The number of taxpayers seeking the benefits of Qualified Small Business Stock (“QSBS”) has picked up steam in recent years, particularly since the Tax Cuts and Jobs Act (“TCJA”) lowered the federal corporate tax rates to...more

Keating Muething & Klekamp PLL

Leto v. United States: How a Taxpayer’s Section 1202 Exclusion Could Have Been Saved

In Leto v. United States, the taxpayer reincorporated an S corporation business into a C corporation, then the taxpayer later sold the shares in the C corporation and tried to exclude the gain from such sale under section...more

DarrowEverett LLP

Accidental Termination on Purpose? S Corp Ruling Could Be Huge For QSBS Owners

DarrowEverett LLP on

Qualified Small Business Stock (“QSBS”) is arguably one of the largest “gifts” Congress has given taxpayers by excluding from a shareholder’s gross income the greater of $10 million or 10 times the shareholder’s basis in the...more

Winstead PC

An Overview of Section 1202 Qualified Small Business Stock

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Thinking about investing in a young, promising company? Section 1202 of the tax code offers a significant incentive for individuals to do just that....more

Pillsbury - Propel

How This Multimillion-Dollar Tax Benefit Can Slip Through Your Fingers: Don’t Miss Out!

Pillsbury - Propel on

The Qualified Small Business Stock (QSBS) status under Section 1202 of the Internal Revenue Code provides a significant tax advantage for small business owners (i.e., Founders) and investors. It allows for a 100% capital gain...more

Keating Muething & Klekamp PLL

Tax Planning - Stacking and Packing the Benefit under Section 1202

Section 1202 provides a significant incentive for taxpayers to invest in small businesses structured as C corporations by allowing them to exclude large amounts of gain on a future sale of stock in those businesses. ...more

Patterson Belknap Webb & Tyler LLP

QSBS Rollovers

Most founders are familiar with Section 1202 of the Internal Revenue Code, which provides a tax exemption for the sale of Qualified Small Business Stock (QSBS).  Less well known is Section 1202's cousin, Section 1045, which...more

Pillsbury Winthrop Shaw Pittman LLP

Estate and Tax Planning 2023 Update: Act While You Can

Although the IRS is now on high alert for wealthy individuals, new and existing planning opportunities are available, such as tax-free gifts and other advantageous planning. Wealthy individuals and families should take...more

Mintz - Tax Viewpoints

Considering Converting an LLC into a Corporation? Here Are the QSBS Issues You Should Be Thinking About

A common question we receive from founders is whether to organize their start-up business as a corporation or as an LLC. While there are many non-tax-related factors that need to be considered, this is often (at least in...more

Cooley LLP

Maximizing QSBS for Entrepreneurs

Cooley LLP on

Most entrepreneurs creating high-growth startups in the US form their companies without giving much thought to maximizing their potential tax benefits at the time of sale. The conventional wisdom is to form a Delaware C...more

Mintz Edge

Considering Converting an LLC into a Corporation? Here are the Section 1202 Issues You Should be Thinking About

Mintz Edge on

A common question we receive from founders is whether to organize their start-up business as a corporation or as an LLC. While there are many non-tax related factors that need to be considered, this is often (at least in...more

Fox Rothschild LLP

California Closes Tax Loophole That Shielded Out-of-State ‘ING’ Trusts

Fox Rothschild LLP on

Earlier this week, California Gov. Gavin Newsom signed into law a retroactive tax on so-called “INGs” — Incomplete Gift Non-Grantor Trusts. Note that the law, which is retroactive to Jan. 1, 2023, has some limitations in...more

WilmerHale

State Taxation of Qualified Small Business Stock: Federal Tax Exclusion Not Always Replicated at State Level

WilmerHale on

In the event of an M&A transaction, many stockholders plan to take advantage of the exclusion from federal taxable income of gain realized from the sale or exchange of “qualified small business stock” (QSB stock). Section...more

ArentFox Schiff

The Inflation Reduction Act, Could It be Hello, Goodbye?

ArentFox Schiff on

On June 9, 2023, US House Ways and Means Committee Chairman Jason Smith introduced the American Families and Jobs Act, which would have major implications for several provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and...more

Wilson Sonsini Goodrich & Rosati

Alternative Cash Management Strategies Should Not Have an Impact on Qualified Small Business Stock (QSBS) Status

In light of the banking crisis of 2023, many emerging growth and start-up companies have explored alternative cash management strategies, including holding cash in money market funds or investing in cash equivalents such as...more

Foley & Lardner LLP

LLC vs. C-Corp vs. S-Corp

Foley & Lardner LLP on

Before founders can kick-start operations, bring in customers, or engage investors, they are advised to create a legal entity to pursue such milestones. Establishing a legal entity serves several key purposes: the founder can...more

Goodwin

Current Issues for Qualified Small Business Stock - How New R&E Expensing Rules Could Hurt Your QSBS Status, and Why Cash...

Goodwin on

An early-stage company can offer prospective investors an attractive investment opportunity, particularly if the company’s stock will qualify as “qualified small business stock” (QSBS) for US federal income tax purposes. This...more

Wilson Sonsini Goodrich & Rosati

IRS Rules That an Enterprise Cloud Application Software Company Is Engaged in a Qualified Trade or Business for QSBS Purposes

On May 12, 2023, the Internal Revenue Service (IRS) published private letter ruling 202319013 (the PLR), which concluded that an enterprise cloud application software company is engaged in a qualified trade or business for...more

Alston & Bird

Qualified Small Business Stock (Section 1202)

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Our Federal Tax Group highlights a rule that exempts certain small business stock sales from taxes. What kinds of small companies are ideal candidates for qualified small business stock (QSBS) gain exclusions?...more

Orrick, Herrington & Sutcliffe LLP

The Australia to U.S. "Flip Up"

If your Australian company is pursuing United States investors or seeking to grow its presence in the United States, you may want (or need) to consider a “flip-up” to a U.S. entity. While a flip-up can bring significant...more

WilmerHale

2023 Venture Capital Report

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US Market Review and Outlook - Venture capital financing and liquidity activity contracted in 2022 from the record-breaking levels of the prior year, in the face of declining equity markets, rising interest rates and...more

Cooley LLP

Banking Sector Events May Affect Qualified Small Business Stock Treatment

Cooley LLP on

Startups and emerging companies that are reevaluating their cash management policies following recent events in the banking sector should be aware of the implications of such policies on qualified small business stock (QSBS)...more

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