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In order for a Buyer or Investor to acquire §1202 status, the original sale had to be a stock sale & 5 years must pass from the date of that stock purchase to become QSBS §1202 eligible.
For example, A private equity firm bought/invested in a company for $20 million, and over the next 6 years, the value of their shares increase in that company to $220 million. Using §1202, they would pay NO taxes on a sale. Taxes would only begin to be calculated after the first $220 million of sales proceeds.
Below are 3 articles to familiarize yourself with the IRS's IRC 1202.
BLOOMBERG TAX® Detailed 12-page article for CPAs re QSBS and IRS IRC §1202 with 127 footnotes. (pdf)Download
Section 1202_ A Big Deal for Small Business - A Big Deal for Small Business by By Matthew E. Rappapo (pdf)Download
Business Owner Introduction to IRC 1202 Tax-Free Sale of a Qualified US Business (pdf)Download
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