Incorporate Before Year End

As I’ve written about before, Congress has enacted a significant tax break. If you purchase qualified small business stock before the end of the year, and if you hold that stock for 5 years or more, you will be completely exempted from tax on the gain from the sale of the stock (subject to a very large cap). This exemption applies to the alternative minimum tax as well.

As a practical matter, what does this mean?

  • If you are on the fence about starting your company this year or next, start it this year.
  • Start your company as a C corporation, not an S corporation or LLC. S corporations and LLCs don’tqualify.
  • Consult a tax advisor to make sure you qualify.

For another article on this, see this article.

About Joe Wallin

Joe Wallin focuses on emerging, high growth, and startup companies. Joe frequently represents companies in angel and venture financings, mergers and acquisitions, and other significant business transactions. Joe also represents investors in U.S. businesses, and provides general counsel services for companies from startup to post-public.
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