1202 Stock Sale?

by an intermediary from California State University, Northridge

Jan 27,2023

Anyone have experience doing a 1202 stock sale to not trigger capital gains? Recently learned about it and curious if there’s any real life applications someone could share. 

Seems like it could be a benefit for the seller as well as a negotiating tactic for the buyer.

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intermediary from The University of Chicago - Booth School of Business

Whether a business qualifies for 1202 is seller-driven. Buyer cannot influence that or change that or make it happen. If a business does qualify for 1202, then, very likely, the seller will insist on a Stock sale, which the buyer may or may not like or agree.

01/27/2023 | like reply | 0 likes

professional from New York University

I deal with it frequently. C Corp for at least 5 years, stock held for at least 5 years, business must be one of permitted businesses for at least five years, etc. Fairly straightforward, but some states (e.g., NJ) don't allow it, plus if the gain exceeds the $10MM the rate is 28% not 20%, etc.

01/27/2023 | like reply | 0 likes

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