At a Washington tax conference on May 20, Treasury Assistant Secretary for Tax Policy Kenneth Kies reportedly signaled that anti-stacking regulations targeting Code §1202 qualified small business stock (“Q.S.B.S.”) are likely forthcoming.
For years, when advisors discussed Q.S.B.S. stacking with clients, there tended to be two reactions. One was that the Code quite clearly permits it and that, as long as trusts are sufficiently separated so that no two trusts can be viewed as one, tax- payers should be able to create as many separate taxpayers as possible. The other was that the result feels too good to be true, and when something feels too good to be true, one should worry.
The statutory argument is real. Code §1202(h) expressly contemplates that Q.S.B.S. may be transferred by gift without losing its character. And yet, when planning be- comes highly mechanical and highly marketed, one starts to wonder when Treasury and the I.R.S. will decide that enough is enough. The author’s
