QSBS, section 1202, Qualified Small Business Stock 

If you are considering selling your business in the next 3 to 5 years, and your business qualifies under specific conditions, you should strongly consider setting up your business as a C-Corporation. Yes, this is contrary to the typical advice, setting up as an S-Corporation.

The little known section 1202 rules have been expanded, and they are better than before.

Today, you have the ability to sell up to $15 million worth of stock at zero capital gains if your business shares have been held for at least 5 years. If you hold on for four years, you earn a 75% reduction in the capital gains tax. If you sell after 3 years, there’s a 50% reduction. 

Curious to learn more about this tax law and future tax tips, email carljcox@40accounting.com or connect on LinkedIn. 

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