Risk & Business Magazine Hardenbergh Insurance Group Magazine Summer 2018 | Page 8
1202 REAL ESTATE
The Forgotten Exclusion
Section 1202—Qualified Small
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
1. It must have been issued aft