Section 1202 And S Corporations

With the corporate tax rate reduced from 35% to 21%, we have experienced a heightened awareness that Section 1202 allows business founders and investors to exclude millions of dollars of otherwise taxable gain when they sell qualified small business stock (QSBS) if all of the taxpayer level and issuer level qualification requirements are met.

This article is one of a series of blog posts addressing planning issues relating to qualified small business stock (QSBS) and the workings of Sections 1202 and 1045 of the Code.

Advanced Section 1202 Planning – Dealing With the Problem of S Corporations

Two basic requirements of Section 1202 are that:

1. Only C corporations can issue QSBS.