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QSBS & Tax Planning Services

Experience adds up in planning strategies.

Code Section 1202 provides each taxpayer (stockholder) with an unmatched opportunity to exclude at least $10 million of gain (or perhaps substantially more under a 10X contribution gain exclusion cap) from taxes when QSBS is sold if all of Section 1202’s eligibility requirements have been met. Our QSBS work spans the entire spectrum of planning issues, from cradle (e.g., the choice of entity decision) through “grave” (the M&A process and beyond).

Our QSBS team focuses on maximizing each client's gain exclusion allowable under Section 1202. If the project involves reinvestment of QSBS sales proceeds, we assist with the planning and implementation of a Section 1045 rollover of sales proceeds. Finally, when clients are faced with a potential IRS audit, we gather the information and documentation necessary to establish that they have met each of Section 1202’s eligibility requirements.

QSBS Contacts

Scott W. Dolson Profile Image
Scott W. Dolson

Member

Louisville, KY

502.568.0203 Email
Brian S. Masterson Profile Image
Brian S. Masterson

Partner

Nashville, TN

615.251.5588 Email
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Claiming the Gain Exclusion

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Section 1045 Rollover Planning

How We Help Clients

We work closely with founders, management and investors who are making an initial choice of entity decision, in connection with the issuance of QSBS, vetting their eligibility to claim Section 1202’s gain exclusion (before or after a sale of QSBS) and assisting companies and shareholders in navigating through their M&A sales process. Here are several additional specific categories of QSBS-related projects regularly handled by our Tax Planning Team:

  • Assisting clients making choice of entity decision (e.g., should I operate my business through a “C corporation looking down the road to claiming Section 1202’s gain exclusion?).
  • Assisting clients who are converting LLCs/LPs taxed as partnerships into C corporations.”
  • Dealing with the problem of mixing S corporations and QSBS, including restructuring an S corporation’s assets using a tax-free Type F reorganization, prior to making the S corporation a stockholder of a new C corporation that issues QSBS.
  • Issuing written tax opinions addressing various QSBS-related issues, including eligibility to claim Section 1202’s gain exclusion and reinvesting QSBS sales proceeds under Section 1045.
  • Advising founders, management teams and investors with respect to their QSBS eligibility and documentation requirements.
  • Handling the restructuring of businesses with QSBS in mind.
  • Assisting clients with respect to the intersection between Section 1202 and equity compensation planning,
  • including issuing various types of equity and equity rights (e.g., restricted stock, convertible debt and SAFEs).
  • Advising founders and management teams in connection with M&A transactions, including the nuances of equity rollovers involving QSBS.
  • Assisting companies who are working through their QSBS-related communications with investors, including providing certificates or information copies of opinions
  • Advising stockholders with respect to how to maximize their Section 1202 gain exclusion amounts.
  • Dealing with difficult Section 1202 eligibility issues and associated planning.
  • Assisting with all aspects of reinvesting QSBS sales proceeds into replacement QSBS under Section 1045.
  • Advising clients with respect to documenting their QSBS-related return positions.
  • Advising with respect to how carried interests mesh with QSBS
  • Assisting investment funds and investors with planning for holding QSBS through pass-thru entities (LLCs/LPs).

QSBS Resources (Download)

Tax Law Defined® Blog

Providing insight and practical guidance on the latest developments in federal, state and local tax planning, tax administration, and enforcement matters.

Determining the Applicable Section 1202 Exclusion Percentage When Selling Qualified Small Business S...

May 13, 2022 | Blogs

When Section 1202 was enacted in 1993, a 50% gain exclusion applicable to the sale of qualified smal...

Opportunity Zone Reform: The Opportunity Zones Transparency, Extension, and Improvement Act

April 20, 2022 | Blogs

The federal Opportunity Zone tax incentive program has facilitated substantial new investment in des...

Part 1 – Reinvesting QSBS Sales Proceeds on a Pre-tax Basis Under Section 1045

April 19, 2022 | Blogs

Section 1045 allows stockholders to reinvest on a pre-tax basis, proceeds from the sale of qualified...

Part 2 – Reinvesting QSBS Sales Proceeds on a Pre-tax Basis Under Section 1045

April 19, 2022 | Blogs

Section 1045 allows stockholders to reinvest on a pre-tax basis, proceeds from the sale of qualified...

Selling QSBS Before Satisfying Section 1202’s Five-Year Holding Period Requirement?

April 19, 2022 | Blogs

A stockholder must hold qualified small business stock (QSBS) for more than five years in order to c...

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And They’re Off! Kentucky’s Annual Real Property Tax Appeals Season Begins the First Week of May

April 8, 2022 | Blogs

Now that much of the craziness and uncertainty of the COVID-19 pandemic has passed, which affected t...

Ohio Tax Talk: How Small Business Relief Would Work

April 1, 2022 | Blogs

This article was originally published in Law360 Tax Authority. After making its way through the Ohi...

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Dealing with IRS Tax Disputes: An Underfunded, Overwhelmed, Yet Formidable Adversary

March 31, 2022 | Blogs

The Taxpayer Advocate Service recently released the National Taxpayer Advocate’s 2021 Annual Repor...

Kentucky Enacts New Laws to Further Promote the Distilled Spirits Industry

March 30, 2022 | Blogs

Last week, the Kentucky General Assembly passed 2022 House Bill (HB) 500, which will boost Kentucky...

New Indiana Low-Income Housing Tax Credit

March 29, 2022 | Blogs

Indiana recently enacted a state Affordable and Workforce Housing Tax Credit (the “Affordable Hous...

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