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