Small Business Investment Tax Exemption Expires December 31

Congress passed a law last year to provide investors who acquire “qualified small business stock” with a significant tax benefit: 100% exemption on the capital gains realized when the shares are sold. The catch? The “qualified small business stock” must be purchased by the end of 2011. From tax lawyers on JD Supra:

Important Tax Planning Opportunity in 2011 for Investors in Small Businesses (Wilson Sonsini Goodrich & Rosati):

“… investors who acquire qualified small business stock (QSBS) before January 1, 2012, may receive a substantial tax benefit as a result of changes to the tax laws made by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 that are scheduled to expire at the end of this year. Entrepreneurs and investors considering forming or making investments in qualifying corporations, including owners of unincorporated businesses considering incorporation and holders of convertible debt in qualifying corporations, should be aware of the potential advantages of acquiring QSBS before 2012.” Read more»

Qualified Small Business – 100% Tax Exemption Set to Expire at Year End (Foley Hoag LLP)

“Only non-corporate investors, including individuals, estates and trusts, qualify for the benefits of the QSBS gain exclusion rules. A non-corporate investor that owns an interest in a flow-through entity (such as an LLC, partnership or S corporation) also may be eligible for the exclusion with respect to their share of the gain from the sale of QSBS held by the flow-through entity, provided that certain special rules are satisfied.” Read more»

See also:

End of Year Tax Planning: Taking Advantage of Expiring Tax Incentives (Butler, Snow, O’Mara, Stevens and Cannada, PLLC):

“With the Work Opportunity Credit, employers were eligible for a credit of 40% of up to $6,000 in first year wages paid to new hires from certain targeted groups, subject to certain requirements and limitations. These groups included members of families receiving assistance under the Temporary Assistance to Needy Families program, qualified veterans, designated community residents, and others. The program was set to expire August 31, 2011. The Tax Relief Act extended the program through December 31, 2011 and is effective for individuals who began work after December 17, 2010.” Read more»


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