New Corporation Formation

by a searcher from University of Pennsylvania - The Wharton School

4 years ago

Any lawyers or tax professionals here that can help me with a formation question? I specifically want to understand if we can organize a new entity as a C or S corp to take advantage of the Qualified Small Business Stock opportunity. 

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professional from Northwestern University - Kellogg School of Management

In certain cases, corporate stock is permitted to be sold without any federal income tax being incurred. Application of the exclusion requires the meeting of certain tests, including: (i) the issuer of the stock being a C corporation; (ii) a selling shareholder who is not a corporation; a holding period in the stock of at least five years; (iii) a maximum exclusion amount per year per issuer of the greater of $10 million or 10 times the aggregate adjusted basis of the disposed of stock; original issue stock; (iii) the assets of the issuer not having exceeded $50 million on, before, or immediately after the issuance; and (iv) 80 percent or more of the assets of the issuer being used in the active conduct of a qualified trade or business. Qualified trades or businesses generally exclude personal services businesses, banking, insurance, financing, leasing, investing, farming, mining, and operating a hotel, motel, or restaurant.

4 years ago | like reply | 0 likes

searcher from University of Pennsylvania - The Wharton School

Great article. Thanks for sharing.

4 years ago | like reply | 0 likes

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