A range of strategies for tax investors. Table of Contents.
To help entrepreneurs, Congress granted a tax exemption for small business capital gains. Small here is defined as having no more than $ 50 million worth of assets when an investor makes purchases.
The deal is codified in Section 1202 of the Tax Code. To qualify for this exemption, you must obtain your shares in the company through purchase or work and not in the secondary market. You have to hold out for five years and you must have bought after 2010. (Apple founders came 33 years early.) The cap profit giveaway is good for an exemption of more than $ 10 million, or 10 times your purchase price.
Cheers to small, struggling companies. If 500 investors brought in $ 100,000 each to launch the next Apple, they could collectively rule out a $ 5 billion capital gain on the payout.
Reform feed? Could be. Be aware, however, that startup lotteries winners tend to work in technology, a sector that donates to progressive causes. Section 1202 will likely exist for a while.