QSBS Acquisition Criteria

Forming a Management Holding Company for QSBS

Another avenue could be to create a management holding company where the insurance, finances, and payroll are managed. According to the AICPA, a qualified small business for Section 199A QBI can be a management holding company. Tax accountants and lawyers have been looking to Section 199A for … Read More

QSBS Stock Acquisition with a Holding Company

The graphic below illustrates the ownership structure after 100% of the stock is acquired in a qualified small business. The PE fund would form a holding company that would issue QSBS to the PE fund after infusing capital into the holding company. The holding company would then … Read More

Structuring QSBS Transactions

Purchasing existing stock or assets in a company does not qualify as qualified small business stock (QSBS). QSBS has to be newly issued stock and qualify as a Section 1202 qualified small business. Refer here for details on what constitutes a qualified small business. Section 1202 of the … Read More

Can the QSBS tax exclusion be transferred?

The transfer of QSBS through a gift or estate is considered a tax-free transfer for QSBS and maintains the tax exclusion upon transfer (Section 1202 (h)). Given the differing tax treatment of various types of gifts, it can become important to understand various differences in ways “gifts” are made when planning, … Read More

How can QSBS stock be acquired?

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