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.
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 your self with the IRS's IRC 1202.
Section 1202: A Big Deal for Small Business by By Matthew E. Rappaport, Falcon Rappaport & Berkman PLLC, New York, NY, and Caryn I. Friedman, Ernst & Young LLP, Washington, DC. Published Aug 3, 2018. See highlights on page 2.
#3.) Detailed 12 page article for CPAs re QSBS and IRS IRC §1202 with 127 footnotes. Look at the first paragraph on page 1 to verify the benefits for both business owners and those that invest in a qualified business.
Why IRC 1202 is good for America, Business owners and Investors. Easy article to read written by Howard Francis.
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ERTC is a Payroll Tax Credit and is reported on IRS Form 941.
There is an IMMEDIATE cash flow improvement and a large 2020 and 2021 (Jan to August) refund as well.
Why? Once ERTC qualified, Private & Non Profit employers can reduce employment tax deposits with the IRS or request an advance of ERTC from the IRS on Form 7200 Advance Payment of Employer Credits Due to COVID-19.
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Copyright © 2021 Profits USA - All Rights Reserved. This reading material presented with the understanding and agreement that Profit USA Inc. is not engaged in rendering legal or other professional services by posting said material. US Treasury regulations require us to inform you that any US federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. The services of a competent professional should be sought if legal, accounting, tax or expert assistance is required.