Small Business Stock Gains: Exclusion and Deferral Opportunities 2023

Description

Review the availability and application of three special rules that allow exclusion or deferral of gain from the sale of the stock of a corporation not making the S corporation election. IRC 1202 provides that all or part of the gain from the sale of "qualified small business stock" can be excluded from gross income. IRC 1045 describes situations when the gain from the sale of "qualified small business stock" can be deferred. To understand the application of these two favorable provisions, the meaning of "qualified small business stock" must be understood, as well as other requirements and limitations. IRC 1042 allows deferral of gain from the sale of corporate stock to an employee ownership plan ( ESOP). This deferral requires a qualified reinvestment at the right time in an adequate amount. Study how these three provisions apply in the context of tax planning for corporate businesses.

Highlights

• IRC 1202-The benefit of the exclusion
• IRC 1202-The requirements that must be met
• IRC 1202-Limitation on the amount of the exclusion
• Comparison of the IRC 1202 exclusion to making S corporation election
• IRC 1045-The benefit of the deferral
• IRC 1045-The requirements that must be met
• The basics of Employee Stock Ownership Plans (ESOP)
• IRC 1042-The benefit of the deferral
• IRC 1042-The requirements that must be met

Objectives

• Determine the benefit of the IRC 1202 exclusion
• Identify the Section 1202 requirements that must be met and the limitation on the amount of the exclusion
• Determine the benefit of IRC 1045 deferral
• Identify the requirements that must be met to qualify for IRC 1045 deferral
• Determine the benefit of the IRC 1042 deferral
• Identify the requirements that must be met to qualify for IRC 1042 deferral

Designed For

CPAS and Attorneys