Section 1202 Stock

1 2011 and held for more than five years sec.

Section 1202 stock. Section 117 c of pub. The section 1202 exclusion in a nutshell. To claim the tax benefits of the stock being qualified the following must apply.

Under irc 1045 b 5 and 1202 h 4 b section 1202 gain can also be rolled over in a tax free transaction under irc 351 or 368 into non qsbs. 1202 is generally not available to exclude gain on the sale of s corporation stock or a partnership interest. The section 1202 exclusion works simply.

If the company is defined as a qualified small business and other certain requirements are met then the sale could benefit from a potential 100 gain exclusion for tax purposes. The section 1202 qualified small business stock exclusion also called the qsbs exclusion allows you to avoid taxes on the sale of your business. This section shall apply to gain from the sale or exchange of stock treated as qualified small business stock by reason of subparagraph a only to the extent of the gain which would have been recognized at the time of the transfer described in subparagraph a if section 351 or 368 had not applied at such time.

What requirements must be met to be considered a qualified small business. A prior section 1202 was repealed by pub. 1 currently the statute provides an exclusion from income for any gain from the sale or exchange of qualified small business stock qsbs acquired after the effective date of the statute and held for more than five years.

1202 exclusion was increased from 50 to 75 a 60 exclusion remained the same for the sale or exchange of certain empowerment zone stock for any gain from the sale or exchange of qsbs acquired after feb. 3 qsb stock must be stock in a c corporation. Any additional appreciation of the replacement stock would not qualify for irc 1202 treatment.

2 however the amount of gain that is excludible from. It doesn t get better than this but let s go over the details. 17 2009 and before jan.