Venture Capital (VC) funds can elect the Section 1045 rollover, but there are some nuances between various situations. VC funds are structured as partnerships; therefore, the Section 1045 treatment will be parallel with most partnership structures. The IRS has laid out detailed guidelines over the treatment of … Read More
For purposes of this article, we are referring to General Partners of venture capital (VC) firms or similar private equity investment funds. General Partners can accumulate capital gains from two main sources, i.e. (i) direct investments or (ii) carried interest. Generally, General Partners of VC firms will … Read More
If you have recently sold your QSBS with a realized gain before the five year holding period has concluded you may want to elect the Section 1045 rollover. After the stock is sold you have 60 days to reinvest your QSBS sale proceeds into one or more … Read More
Under Section 1202(h)(1) inherited QSBS is considered a tax-free transfer, which maintains QSBS qualification to the transferee. If the inherited stock qualified for QSBS when it was acquired by the precedent holder than the stock will qualify for section 1202 QSBS. The transferor's holding period and basis … Read More
Individuals and pass-through entities are considered eligible investors for QSBS purposes. Venture Capital (VC) firms are formed under a limited liability partnership (LLP) legal structure, which is a pass-through entity. Therefore, limited partners (investors) in a VC firm will be able to take advantage of the Section … Read More
The timing of exercising stock options can vary from person to person and depends on whether your options are non-qualified (NQSO) or incentive stock options (ISOs). ISOs can only be granted to employees, unlike NQSOs that can be granted to anyone (i.e. contractors, employees, and directors). … Read More
Stock options could qualify for QSBS after they are exercised, but there are a few steps you should take before exercising your "QSBS stock options". If you are concerned about the tax implications of selling or exercising your QSBS stock options than you are in the right … Read More
A tax-free stock transaction happens when stock is transferred or exchanged without realizing any gains on the stock. A few examples of tax-free transactions that maintain QSBS status are (i) gifted stock, (ii) stock inherited after a death, whether through an estate or other means, (iii) from … Read More