Holding Private Shares in an IRA It is very common for founders or early employees…
A potentially huge tax savings available to founders and early employees is being able to exempt up to $10 million in capital gains or 10x the invested capital, whichever is greater, from federal taxes if the investment was held at least 5 years. The rules applying to Qualified Small Business Stock (QSBS) were designed to encourage investments in certain small businesses.The exemption no longer applies to California income taxes since 2012 However, the exemption no longer applies to California income taxes since 2012. Some entrepreneurs contemplate leaving California before their M&A or IPOs are completed, but be warned that this must be a bonafide intention to move and is subject to audit for at least 3 years. Other states should be reviewed on a case by case basis.
The main factors to qualify for QSBS status are:
For professional tax assistance on your QSBS situation, feel free to contact Leung, Louie, IP & Co. LLP.