Joseph W. Bartlett, Special Counsel, Reitler Kailas & Rosenblatt LLC
The attractions of Section 1202 of the Internal Revenue Code for investors in small to medium sized private companies (under $50 million in “aggregate gross assets”) have been around for a long while … exclusion of the federal tax on capital gains on the sale of stock held for at least five years. The benefits started out as an exclusion of 50% of the gain from tax but that morphed into 100%; that said, the benefit was subject to periodic renewal and disappearance in the absence of Congressional action … dampening tax planning opportunities, for example. One holds the shares for four years and then finds the benefit has expired.
