Tax Changes: Temporary Exclusion of Tax on Gain From Small Business Stock

Small business owners are given temporary relief from tax on gains from sale of company stock as a result of the Small Business Jobs Act.
100% exclusion of gain from the sale of small business stock
Ordinarily ,individuals can exclude 50% of their gain on the sale of qualified small business stock(QSBS) held for at least five years (60% for certain empowerment zone businesses). This percentage exclusion was temporarily increased to 75% for stock acquired afterFeb. 17, 2009 and before Jan. 1, 2011. Under the Small Business Jobs Act, the amount of the exclusion is temporarily increased yet again, to 100% of the gain from the sale ofqualifying small business stock that is acquired in 2010 after September 27, 2010 andheld for more than five years. In addition, the Small Business Jobs Act eliminates the alternative minimum tax (AMT) preference item attributable to such sales. ( This information provided by: © 2010 Thomson Reuters/RIA. All rights reserved.)

If you are unsure if your small business qualifies for this tax exclusion, contact your CPA.