Take IRC §1045, a little-known tax provision that’s been in effect since August 1997. It allows a taxpayer to sell qualified small-business stock without having to recognize gain from the sale provided new qualified small-business stock is purchased within 60 days of the selling date.
This provision is not onerous, but must be strictly complied with. First, the stock being sold and being purchased must be “qualified small business stock”. Further, §1045(a) provides that you must hold the stock being sold for more than six months at the time of sale, you must actually sell the stock, the taxpayer doing the selling cannot be a corporation, and you must elect to have §1045 apply. The term “qualified small business” is not specifically defined within IRC §1045, but has the same meaning as it does within IRC §1202(c).
So far not too complicated, except we must understand what the term “qualified small business” means. §1202(c) provides that “qualified small business stock” refers to any stock in a C corporation that is originally issued after the date of the enactment of the Revenue Reconciliation Act of 1993 in order to determine if the business is a qualified small business on the date the stock is issued.>>> READ MORE at: