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You are here: Small Business & Self-Employment Taxes >
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Small Business Stock: 50% Exclusion of Gain
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A noncorporate shareholder, who holds qualified small business stock for more than 5 years, may exclude 50% of the gain on the sale or exchange of the stock.
Maximum Exclusion and Limited to the Greater of:
- 10 times the taxpayer's basis in the stock (or)
- $10 million dollars (shareholder by shareholder basis)
Qualified Corporation and Must Have the Following:
- Stock issued after August 10, 1993
- Acquired at the original issuance
- C corporation only (not an S corporation)
- Have less than $50 million of capital as of date of stock issuance
- 80% (or more) of the value of the corporation's assets must be used in the active conduct of one or more qualified trades or businesses
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