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Small Business Bill - No capital gains tax on new shares issued until the end of this calendar year
I was just made aware of this clause in Obama's small business tax bill. It affects my company's fund raising (in a very positive way), and may affect yours, take a look. This is a post from a Seattle tech list that I follow and here is a link to more information:
http://www.whitehouse.gov/the-press-office/2010/09/27/background-sm...
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Hi all,
I haven't seen much written on this, but I think it's germane for any startup trying to raise funds through the end of the year:
(disclaimer, I'm not a lawyer or accountant, but I did get a rundown from a senior tax partner at Faegre about this). Obama signed a small business aid bill into law last week; there are a bunch of pieces to it, but one especially interesting for fundraising:
From Sep 27 to the end of the year, any investments made in small businesses will qualify for 0% cap gains treatment on that investment.
OK, almost. Here are the caveats.
1) Gotta be a C Corp, no LLCs
2) Gotta be issuing new shares (not buying already-issued shares)
3) Gotta hold the shares for five years
4) Capped at 10x or $10mm, whichever is less
That said, this is pretty sweet in my opinion -- many expect cap gains to go up over the next few years, making this an even sweeter situation.
My fundraising mnemonic is Vision, Urgency and Greed, this helps U and G nicely while you're raising.
Anyway, I'd suggest a quick look into this if you are currently looking for money.
Best,
Peter
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We are going to encourage all our investors to exercise their warrants before the end of the year to qualify for this benefit - we may even give them a discount to get them to do so. More cash earlier!
Ken
http://www.whitehouse.gov/the-press-office/2010/09/27/background-sm...
-----------------
Hi all,
I haven't seen much written on this, but I think it's germane for any startup trying to raise funds through the end of the year:
(disclaimer, I'm not a lawyer or accountant, but I did get a rundown from a senior tax partner at Faegre about this). Obama signed a small business aid bill into law last week; there are a bunch of pieces to it, but one especially interesting for fundraising:
From Sep 27 to the end of the year, any investments made in small businesses will qualify for 0% cap gains treatment on that investment.
OK, almost. Here are the caveats.
1) Gotta be a C Corp, no LLCs
2) Gotta be issuing new shares (not buying already-issued shares)
3) Gotta hold the shares for five years
4) Capped at 10x or $10mm, whichever is less
That said, this is pretty sweet in my opinion -- many expect cap gains to go up over the next few years, making this an even sweeter situation.
My fundraising mnemonic is Vision, Urgency and Greed, this helps U and G nicely while you're raising.
Anyway, I'd suggest a quick look into this if you are currently looking for money.
Best,
Peter
---------------------------
We are going to encourage all our investors to exercise their warrants before the end of the year to qualify for this benefit - we may even give them a discount to get them to do so. More cash earlier!
Ken
Views: 117
Replies to This Discussion
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Permalink Reply by Daniel Leuck on
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Permalink Reply by Bruce M. Bird on
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Hi, Ken. You are correct. The "window of opportunity" until the end of this year involves a recent change to IRC Section 1202. See: http://1202stock.com/modules/news/whoswho.php .
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Permalink Reply by Ken Berkun on
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Nice pointer. I particularly like that it was "singed into law" :-)
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Hi, Ken.
"Don't try to understand 'em, just rope 'em, roll, and brand 'em..."
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Well said Bruce, well said.
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