Qualified Small Business Stock: Maximizing the Section 1202 Exclusion for Startup Investors

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Course Details

Course Information

smart_display Format
On-Demand
signal_cellular_alt Difficulty Level
Intermediate
work Practice Area
Tax Preparer

Date & Time

event Date
Tuesday, January 23, 2024
schedule Time
1:00 p.m. ET./10:00 a.m. PT
timer Program Length
110 minutes

Credit Information

BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$197.00

This course will explain how a business and its shareholders meet Section 1202 eligibility requirements for qualified small business stock (QSBS) to eliminate or reduce taxation of capital gains. Our panel of tax experts will discuss the corporate requirements, shareholder requirements, and the substantial tax savings available for qualifying stocks.

Faculty

Daniel Mayo

Partner

Withum Smith + Brown, PC

Mr. Mayo has more than 20 years of professional tax experience as well as experience in federal, international and financial products taxation. He is a member of Withum’s National Tax Services Group and oversees the U.S. Federal income tax research, planning and review functions. Mr. Mayo is experienced in mergers and acquisitions, capital markets and cross-border transactions.

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Emily Murphy

Partner, CPA

Plante Moran

Ms. Murphy specialize's in federal tax consulting for businesses and their owners. She continuously monitors tax legislation and developing trends to help keep her clients ahead of the curve. Clients look for advice and insight on the structuring and modeling of M&A transactions, tax research, and tax planning. She is also a leader in tax accounting methods practice. Ms. Murphy belongs to the AICPA and the Michigan Association of CPAs. She received her B.B.A. and M.S.A. in accounting information systems from Eastern Michigan University and M.S.T. in taxation from Walsh College.

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Ryan Dobens

Senior Manager, National Tax Department

Ernst & Young

Mr. Dobens is a Senior Manager in Ernst & Young’s National Tax Department where he primarily focuses on the taxation of partnerships and limited liability companies. He also spends significant time advising venture capital funds and their investors as to qualified small business stock investments. Professor Dobens received a B.S. in Accounting from Plymouth State University, and both an M.S. in Taxation and J.D. from Northeastern University.

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Description

Section 1202 offers taxpayers (other than corporations) the potential to permanently exclude from taxable income $10 million (and possibly much more) of capital gains recognized in connection with the sale of QSBS. For investors in certain startups, this can result in millions of cash-tax savings.

There are corporate qualifications, shareholder eligibility rules, and holding period requirements to qualify. Among other things, the business must have no more than $50 million in aggregate gross assets at the time the stock is issued, the company must be engaged in a qualified trade or business, and investors must hold the stock for five years. These are just a few of the many eligibility requirements. Shareholders not holding the stock for five years could preserve QSBS benefits by rolling over the sales proceeds under Section 1045.

Listen as our panel of tax veterans discusses who can benefit from Section 1202, its requirements, the many traps for the unwary, and planning opportunities available so shareholders achieve maximum tax savings.

Outline

Qualified small business stock (Section 1202)
Corporate requirements
- Defining a qualified small business
- Understanding the active business requirement
- Preventing eligibility foot faults
Shareholder requirements
- Holding period requirements
- Ineligible share transfers
- Pass-through entities and QSBS
Strategies to increase the exclusion
Rolling over proceeds from the sale of QSBS (Section 1045)

Benefits

The panel will review these and other critical issues:

How can an eligible investor maximize their QSBS exclusion?
What stock is and is not eligible for the QSBS exclusion?
What are best practices to avoid Section 1202 ineligibility?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

Ascertain whether a stock is eligible QSBS
Determine how an eligible investor can maximize their QSBS exclusion
Verify that QSBS sales are correctly reported to the IRS
Decide best practices to avoid IRC 1202 ineligibility
Identify the corporate and shareholder requirements impacting QSBS

Field of Study: Taxes
Level of Knowledge: Intermediate
Advance Preparation: None
Teaching Method: Seminar/Lecture
Delivery Method: Group-Internet (via computer)
Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.