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Review the availability and application of three special rules that allow exclusion or deferral of gain from the sale of the stock of a corporation not making the S corporation election .
IRC 1202 provides that gain from the sale of "qualified small business stock" can be excluded .
IRC 1045 describes situations when the gain from the sale of "qualified small business stock"can be deferred .
To understand the application of these two favorable provisions, the meaning of "qualified small business stock" must be understood, as well as other requirements and limitations.
IRC 1042 allows deferral of gain from the sale of corporate stock to an employee ownership plan ( ESOP) . This deferral requires a qualified reinvestment at the right time in an adequate amount.
Study these three provisions apply in the context of tax planning for corporate businesses.
CPAS and Attorneys
John McWilliams, CPA, Esq. is professor of accounting at Golden Gate University. Previously he was a professor of accounting at San Francisco State University. He began his career as a tax adviser with a Big Four CPA firm. For more than 30 years, while teaching, he has been a tax adviser to lawyers and CPAs regarding the tax matters of their clients. His areas of expertise include tax issues related to buying and selling privately-held businesses, financially-troubled businesses, business restructuring and reorganization, and ownership succession to employees or family members.
McWilliams has been active in CalCPA, having served as president of the San Francisco Chapter, chair of the Financial Literacy Initiative, member of the CalCPA Board of Directors serving as Vice Chair, and member of the Accounting Education Committee. He has served as a California representative to the AICPA Council, and as a member of two AICPA Tax Division Technical Resource Panels (Corporations, and Shareholders and Partnerships). McWilliams is the original author of two chapters of the CCH Expert Treatise Library: “Federal Taxation of Corporations,” and “Shareholders.”