Startup Act 2.0

Startup Act 2.0 – Making The 100% QSB Stock Exemption Permanent

Good news for startups. A bill has been introduced in the Senate (S.3217) and an identical bill has already been introduced in the House, titled Startup Act 2.0 which, among other things, would make the 100% exclusion from capital gains tax for qualified small business stock held for 5 years or more (subject to a general $10M cap), permanent. The bill would also make the AMT exclusion permanent as well.

If you recall the history, President Obama has been a supporter of this tax break for startups from early on in his Presidency, and he first succeeded in making this 100% tax break a part of the tax law in September of 2010. Unfortunately, that law expired at the end of 2010, a few months after enactment. The tax break was extended for 1 more year after that, but it expired at the end of 2011. Various groups, including the Angel Capital Association, have been working to have the 100% exclusion re-enacted and made permanent.

Startup Act 2.0 would do the following:

  • Make the 100% exclusion permanent
  • Leave the $10M cap in place
  • Make the AMT exclusion permanent
  • It would only apply to stock acquired after December 31, 2012

I have embedded a copy of the Senate bill via Scribd below. You can also find a variety of blog posts that I have written about Section 1202 at the following links:

View this document on Scribd

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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