Foley & Lardner LLP Partners Louis Lehot and Raj Tanden and Associate Jacob Davis published an article in Tax Notes Federal titled, “Qualified Small Business Stock: Founders’ Stock Issues.”
The authors examine redemption issues with qualified small business stock and how to avoid the founders’ stock problem, as well as new business creation, formation, and growth in the United States under Section 1202 of the Internal Revenue Code, which allows a taxpayer to exclude certain capital gains attributable to qualified small business stock (QSBS) as long as multiple requirements are met.
Obtaining QSBS status is part of the investment strategy of most seed and early-stage venture capital firms, and it should be part of every entrepreneur and founder’s tax planning and wealth management strategy.