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Section 1202 Qualified Small Business Stock: Maximizing Tax Advantages of Gain Exclusion and Deferral

Leveraging QSBS Code Provisions Including 1244 Ordinary Loss Treatment

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, February 4, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will offer tax advisers and professionals an exploration of IRC Section 1202 qualified small business stock (QSBS). The webinar will detail the gain exclusion rules of Section 1202 and will describe the types of business entities that are eligible QSBS companies. The panel will also discuss the tax deferral provisions contained in Section 1045 for rollovers in qualified small business stocks, and review specific cases and examples relative to Section 1202 stock. Finally, the webinar will offer guidance on the reporting requirements and planning opportunities related to QSBS.

Description

The Internal Revenue Code provides significant tax benefits for QSBS buyers and owners. Owners of such stock, as defined by Section 1202, can exclude up to 100% of eligible realized gain upon sale of the QSBS after meeting the five-year holding period. For investors funding startup companies, the 1202 exclusion can provide significant tax savings.

In addition to the gain exclusion found in 1202, there are other tax incentives attached to small business stock ownership. Section 1045 allows taxpayers nonrecognition treatment for gain on any sale of QSBS when the proceeds are rolled over into another QSBS. The rollover provision can benefit business owners who want to sell their company and start a new business. By meeting the rules found in 1045, a business owner can defer tax on the gain arising from the sale of the existing business.

Listen as our expert panel details the rules, benefits, reporting mechanics, and planning opportunities of Section 1202 QSBS.

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Outline

  1. Qualified small business stock
    1. Entities eligible for QSBS treatment
    2. Section 1202 cap gains exclusion rules
  2. Section 1045 rollover gain deferral rules
  3. Entities eligible for small business treatment
  4. Section 1202 reporting requirements
  5. Planning considerations for QSBS
  6. Case studies and examples

Benefits

The panel will discuss these and other relevant topics:

  • What types of entities qualify--and do not qualify--for preferential treatment under Section 1202?
  • What are the mechanics of the gain exclusion calculations upon the sale of Section 1202 stock?
  • What are the rules and qualifications for the rollover deferral provisions under Section 1045?
  • What is the current state of IRS challenges to this significant tax break?

Faculty

Karachale, Christopher A.
Christopher A. Karachale

Partner
Hanson Bridgett

Mr. Karachale advises individuals and business entities on a broad range of tax planning and tax controversy matters....  |  Read More

Leung, Raymond L.
Raymond L. Leung, CPA

Managing Partner
Leung Louie Ip & Co.

Mr. Leung has over 25 years of personal and corporate income tax and financial consulting experience with a special...  |  Read More

Strong2, David
David Strong

Partner
Morrison & Foerster

Mr. Strong is the current co-chair of the firm’s Tax Department and co-chair of its Federal Tax practice. He also...  |  Read More

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