Planning Options to Increase the Section 1202 Gain Exclusion Far Beyond the $10 Million Cap
By Anthony Diosdi I. Introduction to Internal Revenue Code Section 1202This article is designed to provide an overview of the federal income tax incentives available to non-corporate holders of “qualified small business stock” (“QSB stock”). As discussed below in more detail, Section 1202 of the Internal Revenue Code permits investors in QSB stock to exclude up to $10 million in taxable gains. Despite the Section 1202 tax incentive, in the past, many investors shied away from QSB stock because of the inherent double tax consequence of subchapter C corporations. However, that may soon change, due to the reduction of the corporate marginal tax rate to 21 percent under the Tax Cuts and Jobs Act of 2017. Later in this article we will discuss how a “taxpayer” can increase the gain…