What Have Folks' Experience Been With Sec 1202, Qsbs? Trying To Learn More.

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09/11/2020 Redacted Redacted

investor Northwestern University - Kellogg School of Management University of Maryland at College Park

WHAT HAVE FOLKS' EXPERIENCE BEEN WITH SEC 1202, QSBS? TRYING TO LEARN MORE.

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professional The University of Chicago - Booth School of Business University of Michigan - Ann Arbor Northwestern University - 09/12/2020

Ray, what’s your question in particular? 1202 is often underutilized but does require certain criteria be met and it can be less applicable in M&A transactions where LLCs are more commonplace than, for example, venture capital and growth equity where its much more commonly available. Feel free to send a direct message and happy to help.

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investor Northwestern University - Kellogg School of Management University of Maryland at College Park - 09/12/2020

Thanks Brian. I’ll email you! Generally curious about the scenarios when it does/doesn’t make sense. I know the entity that the investment is being made into needs to be a Corp, a certain size, and needs to be held for more than 5 years. Maybe those factors are enough to preclude most folks from pursuing it, but just want to make sure that I’m being as thorough as possible in thinking through all the +/- ‘s

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searcher University of Virginia-McIntire - McIntire School of Commerce - 09/12/2020

LLC taxed as a C Corp here with specific intent to take advantage of QSBS. Happy to connect to answer any questions you have.

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investor Northwestern University - Kellogg School of Management Northwestern University - 09/12/2020

Ray - we used 1202 for our bakery acquisition back in 2011, sold last year and original investors should not be paying any capital gains tax - federal and state (except for residents of CA. I'm sure we'll get audited but we have an opinion letter from BDO that says we followed the rules. We will likely use the structure again - maybe not in all circumstances. DM me and I can give you more details.

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investor University of Pennsylvania - The Wharton School Miami University of Ohio - 09/13/2020

I've used QSBS/1202 on two exits and it's a great program. You need to be C Corp or LLC taxed as C Corp. I've invested in four solo search deals recently and two were classic LLC and two were LLC taxed as C Corp or straight C Corp. DM or [redacted] if got additional questions.

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searcher New York University - Leonard N. Stern School of Business - 09/14/2020

I am very curious about the pros & cons of using[redacted]Generally, wouldn't it make sense to do a 1202 in most cases if there are a good amount of individual investors part of your LP pool.

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investor Northwestern University - Kellogg School of Management University of Maryland at College Park - 09/15/2020

Follow up with me in a couple weeks, and happy to share what I learn.

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searcher Georgetown University - 10/03/2020

I realize no one has a crystal ball, but outside of the corp. tax rate potentially moving post-election from 21% to 28%, has anyone heard any proposals that would put the above structure at risk?

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investor Northwestern University - Kellogg School of Management University of Maryland at College Park - 10/13/2020

Hi Justin - Haven't heard this provision being at risk

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