Generally, when talking about qualified small business stock (QSBS) someone is referring to the direct investment they made in a small business, stock options, or the founding of a business, but limited partners (LP) in a partnership also qualify. When an LP invests in an investment vehicle … Read More
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
This scenario is a typical transaction structure that PE funds will utilize.
When a fund is acquiring a members interest in a pass through entity and not stock in a corporation the fund will set up a blocker corporation so that the income is not passing through … Read More
The below graphic illustrates a PE fund acquiring the assets of an existing company.
The PE fund will then form a new corporation and contribute the assets at FMV to the corporation in return for newly issued shares of QSBS. Remember… this can only be done if … Read More
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
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
As a investor in an investment fund, it is imperative to know what the tax implications may be for when you receive your pass-through distributions from the investment fund. QSBSExpert is here to help!
What Businesses Qualify for QSBS?Can My QSBS Gain(s) Be Excluded from Taxes?What are the … Read More
As a manager of an Investment Fund, it is imperative to know both what the tax implications may be for investments you’re considering entering and tax treatment of gains for your Limited Partners as they are sure to ask you. QSBSExpert is here to help!
Which Portfolio Companies … Read More
A tiered partnership involves an upper-tier, the parent or holding company, and a lower-tier, the subsidiary. Generally, the partners of the parent company will have pass-through income or losses from the subsidiary that passes through the parent. For tax purposes, the partners of the parent company are … Read More
Partnerships can elect the Section 1045 rollover, but there are some nuances between various situations in terms of who has the authority to purchase replacement QSBS. The IRS has laid out detailed guidelines over the treatment of the Section 1045 rollover for partnerships. The guidelines are summarized … Read More