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Money for nothing: The Qualified Small Business Stock capital gains exclusion is a giveaway to wealthy investors, startup founders, and their employees - Equitable Growth

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The Qualified Small Business Stock exclusion, enshrined in Section 1202 of the Internal Revenue Code, permits early-stage venture capital firms and angel investors in high-tech startups, those startups’ founders, and early employees to avoid paying any federal income tax on the capital gains from the eventual sale of early-issued shares in these firms. The QSBS exclusion, which was first enacted into law 30 years ago to promote the creation of these kinds of startups, has undergone major revisions since then. Today, the QSBS exclusion provides tax breaks to those who demonstratively need them the least. This unnecessary tax break costs the U.S. Treasury an estimated $2 billion to $3 billion a year in lost revenue now and well into the next decade. And those estimates may be seriously understated due to the opaque attributes of the public reporting on the use of the QSBS tax exclusion. The QSBS exclusion today permits avoiding all taxes on capital gains arising from the sale of early-is

Money for nothing: The Qualified Small Business Stock capital gains exclusion is a giveaway to wealthy investors, startup founders, and their employees - Equitable Growth Skip to content Money for nothing: The Qualified Small Business Stock capital gains exclusion is a giveaway to wealthy investors, startup founders, and their employees June 8, 2023 AUTHORS: Manoj Viswanathan Topics Fiscal Policy Individual Taxation Taxes, Inequality & Growth Overview The Qualified Small Business Stock exclusion, enshrined in Section 1202 of the Internal Revenue Code, permits early-stage venture capital firms

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