Attention startups and existing small businesses looking to raise money by selling stock. This is huge! You may soon find it easier to attract investors thanks to a largely-overlooked provision in the economic stimulus law that lowers capital gain taxes for individuals who invest in “qualified small business” (QSB) stock.
But suddenly it looks like that tax break could grow from merely good to downright golden under an Obama proposal just issued. Obama aims to completely eliminate capital gains taxes on qualified small business stock held at least five years. Yes, that’s right. Zero. It’s a game-changing shift. Startups are already salivating at the prospect of putting together stock deals where individuals (but not corporations) who invest — owners, employees, angels, etc. — can exit and pay no capital gain taxes. Here’s what’s already changed, what may soon change, and what types of businesses and investors qualify:
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