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Regulations in Relation to Small Businesses (view source)
Revision as of 17:39, 8 February 2016
, 17:39, 8 February 2016no edit summary
**Went from 500 holders of record and total assets exceeding $1 million to either 2000 holders or 500 holders who are not accredited investors and total assets exceeding 10 million [http://www.natlawreview.com/article/sec-proposes-rule-amendments-to-implement-jobs-act-registration-thresholds (NLR)]
**More companies are now exempt from registration requirements of the federal securities laws
===Protecting Americans from Tax Hikes “PATH” Act (2015)===
====Qualified Small Business “QSB” Stock====
*Tax break for taxpayers who invest in early stage or start-up companies
*Non-corporate taxpayers who “acquire QSB stock in a C-corporation at original issuance, hold such stock for more than 5 years, sell such stock at a gain, and meet certain other requirements” can now claim complete tax exclusion [http://www.jdsupra.com/legalnews/tax-law-changes-favorable-to-venture-57315/ (JDS)]
*Gain from the sale of the QSB stock will not be subject to capital gains tax
*Requirements
**Corporation cannot be engaged in ineligible businesses
**Gross assets must not exceed $50 million
**For the taxpayer, the amount of gain that can be excluded is limited to the greater of $10 million or 10x the tax basis when the QSB stock was first acquired
====S-Corporation Built-in Gains Tax====
*Tax planning opportunity when acquiring a C-corporation with built-in gain assets
*S-corporations are not subject to entity-level taxation, so there is no double taxation, whereas C-corporations pay tax on sale of assets and then shareholders pay a second level of tax on dividends
*“To prevent avoidance of the entity-level tax applicable to a C-corporation, a corporation with appreciated assets that elects to convert from C to S-corporation status is taxed on a post-conversion sale of any such appreciated assets, to the extent of built-in-gain at the time of conversion, if the sale occurs within a prescribed period after conversion. The law initially set the period at 10 years, but the period was temporarily reduced to 7 and then 5 years during the economic downturn. The 5-year recognition period has been extended indefinitely. ” [http://www.jdsupra.com/legalnews/tax-law-changes-favorable-to-venture-57315/ (JDS)]
====Prevents Tax Increases====
*Provides small business tax relief, including increased small business expensing (Section 124)
**Permanently extends the small business expensing limitation and phase-out amounts
**Expensing limitation increases from 25,000 to 500,000
**Phase-out amounts increase from 200,000 to 2 million
*Offers incentives for innovation, including the research and development tax credit (Section 121)
**Permanently extends the R&D tax credit
**Eligible small businesses (<$50 million in gross receipts) can claim the credit against AMT liability, and the credit can also be used by certain small businesses against the employer’s payroll tax liability
