Does Your Business Qualify for the Small Business Stock Gains Exclusion (1202)?
Section 1202 of the Internal Revenue Code (IRC) is often referred to as the Small Business Stock Gains Exclusion. It is there to give small businesses a tax exclusion on the sale of their stock, and it has recently been adjusted to aid small businesses even more drastically than it had originally.
The passing of the Tax Cuts of Jobs Act of 2017 reduced the corporate income to 21% and the burdens of AMT on 1202 have been mitigated. This means more benefit and fewer requirements to qualify for this tax exemption - a tax exemption that, in prior legislation, increased the capital gain to 100%.
To qualify and not know about this tax exemption can make or break a small business, but the requirements are fairly rigorous. It is also up to the business to prove they qualify, so strict record keeping is imperative.
To help simplify 1202 for small businesses, Frostlegal has created a White Sheet Checklist of all the requirements needed. Click the link to download now.