Founders/Investors/VCs—issue stock now to qualify for zero tax on capital gain
November 23, 2010
Venture & Technology Alert
Holders of qualifying stock will pay no tax or AMT if held for more than five years. How?
- U.S. companies issue stock in exchange for money, property, or as compensation for services before January 1, 2011 (the exercise of warrants or the conversion of convertible notes to stock is treated as newly issued stock at the time of such exercise or conversion)
- in a corporation that has $50 million or less of gross assets
- that has a qualified active trade or business like technology, biotech, and alternative energy.
- Hold the stock for at least 5 years.
- When you sell, you exclude the gain (up to the greater of $10 M or 10x your basis).
- You pay no tax or AMT on the excluded gain.
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