Qualified Small Business Stock – Section 1202
Qualified Small Business Stock (QSBS) is one of the most advantageous provisions in the tax code. It refers to stock issued by a qualified small business that meets specific criteria outlined in section 1202 of the Internal Revenue Code. Investors who hold QSBS for more than 5 years may be able to exclude from gross income up from 100% of any capital gain realized on the sale of QSBS.
Withum’s team is well versed in QSBS requirements and can assist your Company with understanding eligibility and its needs. Withum can help with:
- Deciding whether to remain in partnership or to incorporate to take advantage of QSBS in the future
- Planning for founders of start-ups to ensure their stock qualifies for QSBS in the future
- Assist in determining when and how to inform prospective investors if its stock is QSBS eligible
- Advise shareholders that sold QSBS or are about to sell QSBS
- Prepare tax returns to properly reflect an exclusion of gain under IRC Section 1202
- Assist shareholders in avoiding state taxes that may apply on the sale of their QSBS
- Assist shareholders that sold QSBS before the 5-year mark how they can engage in a "qualified rollover" transaction to preserve QSBS treatment on replacement stock
- Prepare tax memos and/or financial analyses to help shareholders if audited by the IRS
- Provide tax consulting around other QSBS situations
QSBS Quick Bites
Qualified Small Business Stock (QSBS) is one of the most advantageous provisions in the tax code. It refers to stock issued by a qualified small business that meets specific criteria outlined in Sec. 1202 of the Internal Revenue Code. Withum’s Founders and Tech Executives Services Team is here to help you and your company understand the eligibility requirements for QSBS as well as different strategies you can employ to maximize your tax savings.
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For more information or to discuss your business needs, please connect with a member of our team.