Small Business Stock Gains-Exclusion and Deferral Opportunities

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 gain from the sale of "qualified small business stock" can be excluded. 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 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

• What is known about the current IRS selection process?
• Which taxpayers and transactions are being targeted?
• How can taxpayers best prepare for potential audits?
• What caveats should tax professionals be wary of when representing taxpayers during high net worth audits?
• When should a taxpayer go to appeals, and how does the current IRS appeals process work?

Designed For

CPAs and attorneys.