Congress has recently passed legislation that will make the 100% exclusion for Qualified Small Business Stock permanent and retroactive for the year 2015. The purpose of Qualified Small Business Stock, also known as IRC Section 1202, is to encourage investment in and development of startups and small businesses. This article lists some of the important criteria that has to be met in order for the successful angel investor to be able to qualify for the 100% exclusion. There is considerable paperwork as well as other requirements involved, but according to this article it is worth the effort. This is one of the tax benefits that were made permanent in the Protecting Americans from Tax Hikes Act that was recently passed by Congress. Because of the complexities involved with angel investing, people should make sure that they consult with a professional who is familiar with the regulations.
See Marianne Hudson, Angel Investors Receive Tax Gift – From Congress, Forbes, December 29, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
