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Deadline to Make Investments Qualifying for Federal Tax Exclusion

By Kenneth H. Bridges, CPA, PFS     December 2013

Investments made in “Qualified Small Business Stock” (QSBS) after September 27, 2010 and before January 1, 2014 and held for more than 5 years can qualify for a gain exclusion of up to 100%, with no addback for alternative minimum tax purposes.  To be eligible as QSBS, the stock must be of a domestic C-corp with total assets of $50 million or less and at least 80% of the corporation’s assets must be used in the active conduct of a qualified business.  Effective for investments made on or after January 1, 2014, the exclusion drops to 50% and any amount excluded will be an addback in computing alternative minimum tax.

Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP an Atlanta-based CPA firm.

This article is presented for educational and informational purposes only, and is not intended to constitute legal, tax or accounting advice.  The article provides only a very general summary of complex rules.  For advice on how these rules may apply to your specific situation, contact a professional tax advisor.