Estate planning ideas for qualified small business stock

Article Abstract:

Three estate tax provisions of the Taxpayer Relief Act of 1997 contain minimum ownership requirements for an estate to qualify for tax exclusion arising from the sale of qualified small business stock (QSBS). These provisions include Section 2032A (actual-use valuation), Section 2033A (family-owned business exclusion) and Section 6166 (extension of time to pay estate tax). Under Section 1202, taxpayers can avail of the 50% tax exclusion for QSBS provided the stock is in a C corporation, it was issued after Aug 10, 1993, it was issued to a noncorporate taxpayer and it must be held for more than five years. Section 1202(e) also specifies that a corporation must be actively engaged in a qualified trade or business for which at least 80% of the value of the corporate assets are used.

Tax Law, Public Finance Activities, Estate Planning, Small Business, Securities Taxes, Methods, Laws, regulations and rules, Securities, Estate tax, Estate taxes, Tax exclusion

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Supreme Court closes the door (almost) on ordinary losses for stock transactions

Article Abstract:

The ability of a taxpayer to deduct an ordinary loss on the sale of corporate stock is greatly restricted by the Supreme Court decision in Arkansas Best Corp. This decision indicates that stock is property. The gain or loss on the sale of stock will be treated as the gain or loss on the sale of a capital asset. Hedging transactions and partnership interests may now be questioned. Taxpayers may argue that the acquisition of stock to obtain the use of a corporation's assets should be an exception to capital asset treatment.

Analysis, Cases, Arkansas Best Corp., Loss deductions, United States. Supreme Court

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