3.3.2: Note on Qualified Small Business ("QSB") Stock and Rollovers Sections 1202 and 1045

Premium Content
This section of the Encyclopedia of Private Equity is premium content and only available to accounts which have a subscription. If you have an account that has access to this section, please login now.

Register For The Encyclopedia of Private Equity
Encyclopedia of Private Equity & Venture Capital (Monthly Recurring Subscription) Cost: $59.00
Single User - One Year of Complete Access (Best Value) Cost: $495.00

Abstract

There are two primary provisions of the Internal Revenue Code[1], which confer preferential treatment to holders of Qualified Small Business Stock. The first, which is discussed in the first section of this memorandum, is Code Section 1202, which allows a taxpayer, other than a corporation, to exclude 50% of the gain from the sale or exchange of QSB stock that has been held for more than five years. The second provision, which is discussed in the second section of this memorandum, is Code Section 1045, which allows a taxpayer to roll over gain from the sale of QSB stock that has been held for more than 6 months. Generally speaking, Code Section 1202 is intended to apply to stock in a qualified small business acquired at original issuance, and, in limited circumstances, to certain QSB stock received after the date of issuance. The exclusion also applies, to...

Sub-Topics

• 3.3.2.a: Qualified Small Business Stock: Proposed Regulations for PE Funds