Tax Manager Matthew Weber, CPA, MAcc recently published an article for our newest KROST Quarterly Magazine: The Financial Services Issue titled “The Qualified Small Business Stock Gain Exclusion”.

If you sell stock that has appreciated in value, then you must recognize a taxable capital gain. Sounds straightforward, right? While that may be true most of the time, it is in the best interest of investors in small corporations and startups to become familiar with the tax benefits of the Qualified Small Business Stock (QSBS) gain exclusion.

If you are a non-corporate investor who acquired stock of a domestic C corporation directly from that corporation for money, property (other than stock), or certain services and have held that stock for more than five years, then you may be eligible for the QSBS gain exclusion under Internal Revenue Code Section 1202 when you sell that stock.

NON-CORPORATE INVESTORS CAN EXCLUDE CAPITAL GAINS FROM SALES OF QSBS

Depending on the acquisition date of the QSBS, non-corporate investors may exclude 50%, 75%, or 100% of the gain they realize on the disposition of QSBS issued after August 10, 1993, and held for more than five years. If the QSBS is from stock options, then the acquisition date is the exercise date, not the date of grant….Continue »

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