QSBS can only be purchased directly from the qualifying QSBS C Corporation at its original issue. Therefore, stock that would otherwise qualify as QSBS loses this favorable status after it has been purchased through a secondary sale. QSBS can be acquired through: An exchange for any property, not including stock. QSBS … Read More
Qualifying QSBS investments are not hard to find but they can be hard to maintain. A few key caveats to consider when navigating your investment tax planning for follow on investments is (i) the QSBS asset test, (ii) the timeline, and (iii) the tax exclusion. The QSBS … Read More
For gains on the sale of stock to qualify for the Section 1202 capital gains tax exclusion, there are two main criteria on a stockholder level, which are (i) how the stock was acquired, (ii) how long the stock has been held, (iii) how the stock was … Read More
Section 1202(h)(4) states "the basis of such stock in the hands of the taxpayer shall in no event be less than the fair market value of the property exchanged", meaning that the property exchanged for QSBS is valued at fair market value (FMV) and not historical cost … Read More
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform What even is this so called SAFE note? A "SAFE" note stands for simple agreement for future equity. SAFE notes were invented by the famous Silicon Valley accelerator fund Y Combinator. Since … Read More
A "SAFE" note stands for simple agreement for future equity. SAFE notes were invented by the famous Silicon Valley accelerator fund Y Combinator. Since 2013, SAFEs have become popular with founders because they were initially supposed to be fairer to founders, but that is not always the … Read More
Contingent payments can be ambiguous, which causes headaches for transaction tax planning. A few examples of contingent payments are (i) fixed installment payments if a certain level of earnings is met or (ii) contingent payments based on a percentage of the operating cash flow over the next … Read More
The tax code does not directly say if you make a second stock acquisition in a non-QSB stock that it will not affect your first stock's QSBS qualification, but the two purchases will be treated as mutually exclusive. Even if the second stock did qualify for section … Read More
An investor can make a follow-on investment in a section 1202 C Corporation, but the second investment will have a new timeline, which starts on the day of the issuance of the QSB stock. Also, the second investment will still have to follow the same guidelines … Read More
As noted in this article, the QSBS tax exclusion has increased several times since first implemented in 1993. Therefore, “when” QSBS was acquired impacts the magnitude of the potential tax exclusion. Additionally, “how” the QSBS was acquired impacts whether or not the stock is eligible for QSBS … Read More