What Is Section 1202 Stock?

Business,Man,Deal,Investment,Stock,Market,Discussing,Graph,Stock,Market

The Protecting Americans From Tax Hikes Act of 2015 (PATH Act), which was signed into law late last year, finally made several temporary tax breaks permanent. Among the tax breaks included is the Small Business Stock Gains Exclusion, known as Section 1202.

So what is the Small Business Stock Gain Exclusion? Section 1202 is designed to help small businesses, new ventures, and specialized small businesses by encouraging individual investors and investment companies to place their financial backing into these companies. Because these investors are taking a risk by putting their money behind these companies, the Internal Revenue Code offers them relief via Section 1202.

Thanks to the new PATH law, the exclusion of 100 percent of the gain on the exchange or sale of qualified small business stock (QSBS) that has been held for more than five years and which was obtained after September 27, 2010 is now permanent. In addition, the PATH Act also permanently extends the rule that eliminates the 100 percent excluded QSBS gain as a preference item for Alternative Minimum Tax (AMT) purposes.

You can learn a lot more about this important change and about Section 1202, by clicking here. You can also contact us at GROCO if you think that you might qualify for Section 1202. Just call us at 1-877-CPA-2006 or contact us online. We’ll take you through the analysis of the best way to take advantage of this section of the tax code. In addition, many states, including California, have exclusions available, but each state is a little different from the federal requirements, so be sure to contact us to find out how we can help you.

Posted in

California Going After Tax-Evaders

We have discussed the federal government’s efforts to track down tax-evaders many times before, but the IRS isn’t the only tax agency looking to crack down on those who don’t pay their fair share of taxes. The California Franchise Tax Board is in the middle of a five-and-a-half-year effort to automatically find and identify noncompliant…

The IRS is Not a Bully, No.4

The IRS is Not a Bully You can poke a bully in the nose. Palo Alto, CA. July 4, 2014 – This is the Fourth installment of “The IRS is Not a Bully” series, identifying taxpayer concerns and the difficult position in which Congress puts the IRS. Namely, applying ever increasing pressure to operate in…

New Jersey Dems Looking to Tax the Rich Even More

New Jersey Dems Looking to Tax the Rich Even More

New Jersey Dems Looking to Tax the Rich Even More The rich are already taxed enough, right? Although many would disagree with this statement, unfortunately there are others who think that no matter how much they take from them, the rich can’t ever be taxed too much. To that end, democratic lawmakers in New Jersey…

What to Do About Corporate Taxes?

What to Do About Corporate Taxes?

What to Do About Corporate Taxes? The debate over corporate taxes has raged for years, but even though the battle has been going on for decades, it has definitely experienced some changes. The business world, and the world in general, has changed since the days when Ronald Reagan was in office. That means politicians have…