tax Archives - The 411 On Startups (tm)

Tax for Gains and Losses for Investors, IRS Sections 1202, 1244, 1045

Nov

2008

Three Code provisions give preferential tax treatment to equity investments in certain small business corporations. These corporations continue to be a source of job creation and innovation. They can be publicly traded or privately held and, typically, do not have equity structures that permit S corporation elections.

What is an 83(b) election? Restricted Stock Implications: Startup Company Lawyer

Nov

2008

Failing to make a timely 83(b) election with the IRS is something that could lead to disastrous tax consequences for a startup company founder or employee. Founders typically purchase stock pursuant to restricted stock purchase agreements that allow the company to repurchase “unvested” stock upon termination of employment. Similarly, employees may “early” exercise options subject ...

State and Federal Tax Credit Initiatives

Aug

2008

This Google search will provide the latest information on State and Federal bills/laws to provide tax credits for those investing in start-up small businesses as Angels.

Another Way to Sell Without Paying Taxes, Taxes Article – Inc. Article

Aug

2008

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 ...

Tax Benefit for Angel Investors — AICPA The Tax Adviser – Sec. 1202 Qualifications

Aug

2008

The Revenue Reconciliation Act of 1993 created Sec. 1202, which allows noncorporate investors in certain C corporation stock a 50% capital gains exclusion on sale or exchange. The investor must hold the stock for more than five years to qualify for Sec. 1202 treatment; the stock must have been acquired on or after Aug. 12, ...

Qualified Small Business Stock & 1244 Stock

Aug

2008

A taxpayer may be allowed to exclude from taxable income a portion of the gain realized on the sale of qualified small business stock. There are two sections of the Internal Revenue Code that provide such an opportunity. Section 1202 permits a taxpayer to exclude a specified percentage of such gain, while §1045 permits a ...

Google Answers: Using a Small Business C-Corp Tax Loss

Aug

2008

I bought a franchise in 2001 and created an Oregon C-Corp of which I am the only officer and shareholder. I capitalized the venture with $25,000 of capital stock (100 shares, no par value) and, over the next two years, $250,000 in shareholder loans. I sold all the assets of the corporation back to the ...

Capital Gain Loss May Possibly be Written off Against Ordinary Income

Aug

2008

Under the IRC, you can only deduct ordinary losses against ordinary gains, and you can only deduct capital losses against capital gains. Since most people usually have much more ordinary income than they have capital gains, ordinary losses are usually more useful than capital losses in reducing one’s taxable income. Owners of unincorporated businesses who ...

Tax Advantages of Investing in Start-up Businesses

Aug

2008

For once the government and entrepreneurs have one thing in common: they both think that investing in small growing businesses is a good idea. In order to encourage investment in small businesses, Congress has authorized tax benefits for people who invest in certain small businesses. If a small business meets the definition of a Qualified ...