Section 1202 Qualified Small Business Stock: OBBBA’s Expanded Benefits and Opportunities

Section 1202 allows qualifying taxpayers to exclude capital gains on the sale of QSBS. This Section offers substantial tax savings for eligible stockholders, and OBBBA has significantly expanded its eligibility requirements.

Prior to OBBBA, a five-year holding period was required to exclude capital gains for QSBS. OBBBA, however, offers a tiered exclusion, 50% after three years, 75% after four years, and a full exclusion after meeting a five-year holding requirement. Additionally, the aggregate gross assets threshold for qualified corporations has been raised from $50 million to $75 million, significantly increasing the number of eligible corporations. 

The amount of gain excluded per tax return was also increased. Before OBBBA, the maximum exclusion was the greater of $10 million ($5 million if MFS) or 10 times the tax basis in the QSBS. Now, the limit is the greater of $15 million ($7.5 million if MFS) or 10 times the tax basis in the QSBS. These modifications significantly expand the opportunity for stockholders to benefit from the QSBS exclusion.

The eligibility requirements are complex. Advisers must ensure that corporations meet the requirements of Section 1202, including the applicable effective dates.

Listen as our panel of corporate tax advisers reviews the recent changes to QSBS under Section 1202.

I.                   Section 1202 Qualified Small Business Stock: introduction

II.                 Section 1202 before OBBBA

III.               OBBBA's modifications to Section 1202

IV.              Eligible corporations

V.                Eligible stockholders

VI.              Other requirements

VII.            Planning opportunities

The panel will discuss these and other critical issues:

• Modifications to Section 1202 under the OBBBA
• Identifying corporations and shareholders that meet Section 1202 eligibility requirements
• Planning opportunities under 2025 tax legislation
• Avoiding QSBS missteps

Learning Objectives

After completing this course, you will be able to:

• Identify corporations meeting Section 1202 requirements
• Determine stockholders who might be eligible for the Section 1202 exclusion
• Decide what missteps should be avoided with QSBS
• Ascertain Section 1202 planning opportunities after OBBBA's expansion of eligibility rules

• 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.

  
  

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