Scenario I: QSBS exchanged for QSBS If QSBS was exchanged for other QSBS under a Section 351 transaction or a Section 368 Reorganization than the built-in gain on the transfer is eligible to be deferred under Section 1045 as well as any gain on the sale of the … Read More
Whatever hat you are wearing (i.e. accredited investor, founder, employee, or contractor) you do not have to take any required steps when acquiring QSBS at the issuance date. Although legally there are no required steps the QSBS holder should still make an organized checklist before acquiring the … Read More
§ 1.1045-1 Application to partnerships. (a) Overview of section. A partnership that holds qualified small business stock (QSB stock) (as defined in paragraph (g)(1) of this section) for more than 6 months, sells such QSB stock, and purchases replacement QSB stock (as defined in paragraph (g)(2) of this section) may elect to apply section 1045. An eligible partner (as defined in paragraph (g)(3) of this section) of a partnership that sells QSB stock, may elect to apply section 1045 … Read More
The new QSBS corporation and the investor must meet all of the same requirements on the QSBS checklist as the original QSBS. There is one exception to the active trade or business test. The QSBS purchased through a Section 1045 rollover only has to meet the active … Read More
Section 1045(a)(1 & 2) explicitly states that the reinvested QSBS gain is limited to the cost of the new QSBS minus the cost of the original QSBS. If $1 million in QSBS was purchased in 2015 but was sold for $5 million in 2018 there would be … Read More
One of the main requirements of electing the Section 1045 rollover is that the original QSBS has to be held for at least 6 months. After the stock has been held for 6 months at anytime the QSBS holder can sell the stock and rollover the full … Read More
Section 1045 rollover for the deferral of QSBS gains has to meet the 60-day requirement. When convertible notes are acquired they are considered debt securities because it is a hybrid debt and equity, acting as interest-bearing debt until the note is converted to equity on the conversion … Read More
Combining the benefits of the Section 1202 capital gains tax exclusion and Section 1045 rollover gain nonrecognition can formulate the rocket fuel needed to boost your tax savings vehicle. Under Section 1202 a taxpayer is allowed a tax exclusion of $10 million or 10x the initial QSBS … Read More
Under Section 1045(a)(1) the QSBS gains have to be reinvested within 60 days of the sale of the QSBS into new QSBS stock. Although it has to be reinvested in 60 days the seller is not limited to one investment and is not limited to the amount … Read More
Section 1045(a)(1) says the cost of "any QSBS purchased by the taxpayer" will reduce and defer the realized gain. Therefore, the seller of QSBS can make multiple investments within the 60 day period. As a Section 1045 rollover strategy, multiple investments allows the taxpayer to spread their investment risk … Read More