Risk & Business Magazine Hardenbergh Insurance Group Magazine Summer 2018 | Page 8

COMMERCIAL
SECTION
1202 REAL ESTATE
The Forgotten Exclusion
Section 1202—Qualified Small
Business Stock
I
f you had the opportunity to acquire a small business
corporation, operate it for at least five years, then sell it at
a profit and exclude the gain from taxation, would you? I
would think so.
Unfortunately, the section of the Internal Revenue Code
that allows this exclusion, Section 1202, is often times not
used because of our fascination with S Corporations and LLCs.
The exclusion only applies to stock in C Corporations.
With the passage of the new tax law and the reduction in the C
Corporation tax rate to a flat 21 percent, it may now be time for
business owners and practitioners to “rediscover” 1202 stock
and its requirements.
The requirements for Qualified Small Business Stock are as
follows:
1. It must have been issued aft