I AM DECIDEDLY NOT A TAX ATTORNEY, BUT THIS IS SOMETHING I CAME ACROSS. YOU SHOULD CONSIDER IT WITH A QUALIFIED TAX PROFESSIONAL.
Qualified Small Business Stock
Noncorporate taxpayers can exclude 100% of any gain realized on the sale or exchange of “qualified small business stock” (“QSBS”) held for more than five years, if the QSBS is acquired after September 27, 2010 and before January 1, 2011.[1] In addition, the treatment of a percentage of the excluded gain with respect to QSBS as a preference item for purposes of the alternative minimum tax (“AMT”) does not apply to QSBS acquired September 27, 2010 and before January 1, 2011. Stock is “qualified small business stock” only if all of the following requirements are met: (i) the taxpayer acquired the stock at original issue in exchange for money or property other than stock, (ii) the stock was issued after August 10, 1993, (iii) the issuer of the stock was a “qualified small business” when the stock was issued, (iv) the corporation meets an active business requirement “during substantially all of the taxpayer’s holding period” for the stock, and (v) the corporation is a C corporation when the stock is sold and during substantially all of the taxpayer’s holding period for the stock. Stock should be deemed to be acquired at original issuance if the Holders exchange their LLC interests for stock of the Company. A “qualified small business” is a domestic C corporation that has not more than $50 million in assets.