This week, David Elkins (Netanya, visiting Cincinnati; Google Scholar) reviews a new work by Jennifer Bell Levine (Quinnipiac; Google Scholar), Financing Innovation: Modernizing the Qualified Small Business Stock Rules, 80 Tax Law. _ (forthcoming 2027).
This week’s feature article concerns IRC § 1202, which allows investors to exclude gains on qualified small business stock (QSBS). As Professor Jennifer Bell Levine explains, the provision was enacted in 1993 as a means to encourage long-term equity investment in small, risky businesses that had difficulty obtaining conventional financing. The original exclusion covered 50 percent of gain on stock held for more than five years. Congress later expanded the benefit, first temporarily and then permanently, to a 100 percent exclusion for stock acquired after September 27, 2010. Section 1045, enacted in 1997, separately permits gain deferral when proceeds from qualifying stock are reinvested in other QSBS.
Read More
